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Cashew Market Update - September 17, 2020

The market continues to remain reasonably silent. There is no major buying or selling activity to report. Surprisingly, despite the silence, we have only seen kernel prices inching up. Buyers who were keen to cover in July and early August have stopped buying or slowed down their activity as they have seen indications of resistance from sellers to offer for new crop. Kernel shipments have been good and hence buyers are comfortable staying out of the market.

Inshell markets have been reasonably active and the price of in shells has moved up. There has been a decent pickup in demand in India and Vietnam and we have seen inshell buyers/shellers buying at higher levels in the last several weeks (only limited volumes were traded due to lower availability).  The high inshell prices were the reason kernel prices did not fall despite the lack of buying support in the last several weeks.

As we have reported in the last report, inshell surplus is now in few hands and hence the market can run short of inshells at times if the big players decide not to sell.

Indian consumption is better than the previous month and Chinese buying did pickup in Vietnam, lending support to kernel prices. Kernel prices from here on will depends on Indonesian and Tanzanian inshell prices. Tanzania will start auctioning inshells in October and then we will have a better indication of expected 2021 kernel prices.

Possible Scenarios

Bullish

  • Demand/consumption is steady or picking up across Asia
  • Limited availability of good quality inshells at a reasonable price
  • Inshell surplus is spread in a small group of players… unless these players panic inshells will not get any cheaper
  • Tanzania and Indonesia are the next big crops, and these are unlikely to trade at a discount

Bearish

  • COVID-19 second wave and its impact – will there be fresh lockdowns?
  • Excess shipments and inventory at the destination

Please take care and stay safe and healthy

If you have any comments or suggestions, please write to me at ganesh@olamnet.com or message me on LinkedIn.

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