The cashew market had been steadily moving up this year till April, largely been led by short crops and logistical challenges. However, with the COVID-19 situation worsening in India, there was a slight price correction in May and we’re now back to a stable market in June with some early signs of an upward movement. There is now a growing concern about COVID-19 in Vietnam and its potential impact on the supply chain.

On inshells: The Northern hemisphere crops (barring Guinea Bissau cluster) are over and is expected to be slightly lower than last year. The inshell offers are limited right now as processors wait for their contracted cargo from West Africa to land. The season has been characterized by shipment delays and higher cycle times.

On kernels: Kernel prices in Vietnam have stabilized over the last couple of weeks while offers are limited at these levels and logistical challenges are likely to continue through Q3. This will likely lead to continued supply chain disruptions and spot shortages at destinations. We also expect a healthy demand going forward especially in Q3 as retailers start preparing for the holiday season.

Processing is improving slowly across India with COVID-19 cases coming down. Domestic kernel prices in India have largely been stable over the last month and large buyers are coming back in the market to cover for H2 demand especially as we get closer to the festival season.

Trade activity in the Middle East has resumed post-Ramadan and the mid-autumn festival demand from China is expected to be a bit early this year.

There is a growing concern around the COVID-19 situation in Vietnam where we continue to see 350-400 cases daily and increasing. So far, the factories have been running as normal with no major restrictions imposed on their operations. However, if situation worsens in Ho Chi Minh City in the next 2 weeks, then we may experience supply chain disruptions in July.

With 219 million pounds shipped in May, California set a record once again representing 9 out of the last 10 months of record shipments, albeit driven by export demand. May shipments are a 42% increase over last May, bringing the total shipments for the season to 2.448 billion pounds which represents a growth of 21.4% in global demand year on year and exceeds total shipments from the 19/20 crop year. Year-to-date May receipts now stand at 3.1 billion lbs., growing total supply by 24% year on year, which is only slightly higher than the growth in demand. With more markets slowly opening, it is only a matter of time until the pace of demand growth exceeds supply. Given the commitments on the books and shipment trajectory it would be safe to say that we should continue to see record shipments in the last two months of the season, which should help bring this carryout closer to a 610 million lb. level.

New crop commitments stand at 231 million lbs., down 19% over last year, but this comes as no surprise as handlers were off the market following the large subjective estimate released last month that the industry did not buy in to. When we compare the new crop commitments as a percentage of the projected crop, the position seems reasonable with about 7% of the crop already being spoken for versus 9% last year and 5% the year before. This of course may change depending on the objective estimate numbers and how the California drought impacts the actual harvest.

California has entered an extreme drought this year. With no Sierra run off and the states reservoirs at less than half their capacities, the industry will suffer through harvest this season looking forward to a wetter winter next year. In the meantime, growers with poor access to water are making the hard decisions to walk away from orchards, pull trees out and/or reverse irrigate their land. As a result, growers are currently slow to offer new crop at the current levels, as these are below the cost of farming. Since no one is in a hurry, most of the growers await the objective estimate which will be coming out on July 12th.

US: Shipments are up 14% year-to-date. Both inshell and kernel demand has remained strong throughout the year. At the current rate of shipments, the industry is expecting a carryover of 300 million lbs., which is about 200 million lbs. higher than last year. 2021 is an off year for US pistachios. The crop is expected around 800 million lbs. The higher carryover is not enough to compensate for the crop shortfall. Prices remain stable.

Iran: 2020 receipts were 420 million lbs., however Iran shipped record volume in 2020 and is expecting to have record low carry over. The new crop is reported to be affected by frost damage, reducing the crop estimates. Prices have firmed up significantly removing the price disparity seen with US for most part of 2020 season.

US: The US shipped record volumes in May, up 20% year over year. The year-to-date increase is now +17% over the previous year. At the current rate, the US will have a much lower carryout than what most expected in the beginning of the season. Most handlers are sold out on light kernels, and high half counts are hard to find. With the opening of the US economy, food service demand is filling up depleted supply chains. Most in the industry believe that the 2021 crop will be much lighter than the 2020 crop, NASS estimates are still about a month away. Meanwhile, prices have increased in the last couple of months.

Chile: The 2021 crop came out 10-15% lighter than earlier estimates. Kernels are lighter with low defect levels. Demand has been strong especially in the Middle East, Turkey, India, Russia, and Europe. The industry is claiming 80%+ sold / commitment levels. Chile is having shipment issues due to container availability and COVID-19 led productivity constraints. Prompt shipments are hard to find. Chile is expecting to sell its crop 100% before start of the US crop in September.

Planting of the U.S. crop is rapidly winding down. As of June 13th, the USDA indicates the crop was 94% planted. Progress in the southwest continues to lag a good bit behind normal, but otherwise the southeast and VC areas are all but done, with a few exceptions here and there. Generally speaking, the crop is in good shape at this point, though concerns regarding dry weather still remain in the VC and southwest. There are some pockets of dry areas in the southeast as well, but much of the region (particularly the western areas) received some welcome rainfall over the last couple of weeks.
Questions still remain as to how many peanuts will be planted this year. Initial projections by the USDA in March predicted acreage to decline by 2.3%. It seems that most are now leaning towards acres being down possibly slightly more than the 2.3%. The USDA will issue an acreage report on June 30th, so we should have a better idea at that time, though even then we won’t know exactly how many acres we have.

Australia: Given the favorable weather conditions after receiving good rain in December and early January, combined with new plantings coming into bearing, the 2021 crop is predicted to reach 50,770 MT NIS at 3.5% moisture compared to 46,900 MT last year.
South Africa: The 2021 crop is expected to be 49,000 MT, the same as 2020.
Kenya: 2020 crop is likely to close at 39,750 MT, at 10% NIS moisture content/37,000 MT at 3.5% NIS moisture content (7% above 2019 closing of 37,200 MT/34,700 MT). For the 2021 crop, the precipitation and sunshine has been good, and the nut quality is expected to be better than last year. Based on the recent year’s plantings and with new trees coming to fruition every year, the 2021 crop is projected to reach 45,300 MT/42,250 MT.

Chinese demand for macadamias picked up briefly due to Lunar New Year celebrations but the market has subsequently become more subdued again as prices are felt to be on the high side. Prices for S0 and S1 are firming up but at the same time prices for pieces (S4 and below) are adjusting downwards with a differential much higher than last year.

Sesame: Currently the US Sesame market has been feeling the effects of the global logistics issues which have been occurring for some time. There are delays on shipments and arrivals creating a high spot demand for immediate coverage. One of the largest exporters of Sesame is India, and they are facing higher maritime freight and potentially more lockdowns as Covid numbers are continuing to rise. Any lockdowns in India will ultimately lead to more tightness in the overall Sesame supply in the coming months and rising pricing on African & Central American stocks.

The India summer crop is expected to be a bumper crop. The harvest is just around the corner in June and would usually be a basis for a market correction. However, it looks unlikely that the Indian crop will be a factor for at least a few months.

Quinoa & Chia: 2021’s first quarter activities in Quinoa origins remained slow due to the off season. Amidst COVID-19 concerns and first phase of elections in Peru, exports were impacted wherein first quarter exports from Peru fell by 3-4% when compared to last year. Harvest season is about to start in May for Quinoa. Some minor crop loss in some of the growing region is expected because of extreme weather occurring just before the harvest begins.

Demand has been stable for Quinoa, but high spot demand is still the trend to cover for immediate need from buyers. A surge in demand for Chia was seen in both the mainstream markets of the USA and EU, which is a result of low stocks at both destination and origins. Harvest for Chia starts after July in the major chia growing origins, hence with harvest still few months away there could be some price increase for a short period of time and spot availability may look tight.

The INC has announced 2021 crop expectations and carry over figures. The world total production in shell expected is 1,180,500 MT and with the carryover total stock is expected to be 1,306,900 MT. Turkey’s export numbers are reduced by 21.5% compared to 2019-2020 and 1% compared to the 2018-2019 season. We expect notable carryover of the current season’s crop into next year. Turkey is expecting a good crop about 790k MT for the 2021-22 season – This is the third successive season of an above average crop. Italy’s crop is likely to decrease from 160k MT to 70k MT this year.

The INC expects the significant increase in demand with most countries now opening with the lessening of the COVID-19 crisis. Next season’s pricing will largely depend on the Turkish Grain Board (TMO) support price. TMO has declared an 18% increase in the support price for tea, also grown in the Black Sea region of Turkey. The farmers expect a similar increase for hazelnuts. Current market prices (old crop) are at a significant discount to the expected TMO benchmark for next season. Farmers / hoarders are thus unwilling to sell at current levels. On the other hand, the industry would like to cover at current levels given the imminent increase in prices. The Turkish Lira remains weak and will continue to impact the market prices. The larger industry is still uncovered, and we expect consistent buying in the 3rd quarter.