Global production of cashew has also slumped by 40-50 per cent leading to a tight supply position in the markets. The recent devaluation of rupee encouraged exporters to pick up the remaining stock from the local market adding further to the tight position, traders said. According to traders at the New Mumbai market, processing units of raw nuts may run out of stocks completely by September leading to a further rise in the prices.

Normally these units have sufficient stocks to last till December every year, but due to non-availability of timely bank finance they were unable to stock raw nuts in required quantities this time, said Bharat Shah, a leading cashew trader. Presently processing units are working at 30-35 per cent capacity utilisation so that they may drag on foranother couple of months.

If they were to utilise full capacity, the stocks would be over within a month and this would raise the overhead costs arising out of the wages to be paid to the workers.

The cashew processing units are labour intensive and hence the excess overhead expenses, said Mayur Desai of Perfect Cardamom. The exporters are also attracted towards cashew nut exports as the unit-value realisation in export oriented containers is far more than the goods sold in the domestic market. Internationally, a moisture content of three-four per cent in the nuts is readily accepted which leads to increase in weight and thus realises more value while the domestic market requires dry nuts. Moreover, exporters get the benefit of duty drawback as against the negative impact of sales tax in the local market.

Prices are set to rise further as festival demand will pick-up within a few months. To meet the rising demand raw nuts will need to be heavily imported to run the units as the stocks has virtuallyexhausted in Goa and Ratnagiri region. Though there are reports of some stocks lying with the processing units in Kerala and Bangalore as they mainly depend upon the imported raw nuts. India mainly imports raw nuts from African countries.

Though the major supplier Nigeria may not cater to Indian demand as international trading by the country is virtually at a standstill due the prevalent political instability. Unlike almonds, cashews are not allowed under open general licence, hence the imported supply will remain restricted. The supply and price position will ease only after the new crop arrivals in domestic market after Diwali, traders said.