The cashew market is going through a very interesting time. West African crops started to flow as expected with the IVC, Burkina, and Benin governments declaring minimum farmer prices similar to last year’s levels. Initial flows in Africa, as well as Vietnam and Cambodia, indicate a good crop and consistent supply. The weather may negatively affect this if it doesn’t rain as expected in April and May. Kernel markets, with an excess supply of 2019 coupled with the Chinese market being cut off due to COVID-19, have been bearish with prices coming down significantly. The effects of COVID-19 across the US and EU in the next few weeks, as well as overall economic activity, will impact the markets significantly. The next few months are expected to be volatile due to both supply and demand imbalance as well as external market factors being largely unknown.
The 2019 crop is nearly finalized at 2.55 billion lbs. with carrying out slightly higher than expectations. 2020 bloom is coming to a close and has progressed nicely with minimal issues faced so far. Demand across the US and EU has improved with currency movement as well as stocking up by consumers for shelf-stable proteins. Logistics might become a constraint for all major commodities if China’s situation doesn’t improve soon, leading to shipping shortages and delays. The market remains bearish on sentiments as well as good crop expectations for 2020 and is providing good coverage opportunities for buyers.
The pistachios market has been weak but cautiously optimistic. Iran had been holding unsold stocks due to sanctions and now virus-led border closure. California, on the other hand, doesn’t have a worrisome stock situation and is hoping for Chinese demand to come back. Kernel markets remain stable to firm due to good demand across markets. Carryover from 2019 crop is similar to last year at 133 million lbs. (inshell equivalent).
Walnut prices have softened in the last few weeks owing to oversupply in certain markets and COVID-19 concerns. However, currently, lower prices are expected to boost demand as soon as virus concerns subside. For the new Chilean crop, the impact of drought conditions on meat yield and the overall crop is yet to be ascertained which might affect the market sentiments. Spot prices are almost 15% lesser than the previous month and the overall market remains weak.
The hazelnut market also saw some volatility last month due to various factors. Turkish Grain Board announced sales of 20,000 MT to be done within March, pushing spot prices downward. Within a few days of this announcement, prices have weakened by 4-5% compared to last month. The overall estimate is that Turkey has around 220,000 MT (inshell) stocks which can consistently meet the demand for the next few months. Coupled with Lira movement, political stability in the region, and TMO selling off further stocks; traders might sell some volumes faster than expected to keep the markets fully supplied and bearish.
Australia’s crop is expected to be further reduced in 2020, leading to an overall 10%-15% reduction in Australia’s supply over the last two years. The drought situation, especially in non-irrigated areas, has impacted crops negatively. South Africa’s initial harvest looks to be normal and they’re expected to start shipments from April. Inventories at both origins and markets continue to be consumed to meet the existing demand. Demand in China’s market might impact some offtake, which will be ascertained in the coming months. Spot prices for both inshell and kernels remain firm at similar levels as last month.