Traders, who were betting on the market to rebound in the beginning of the year, are now looking to exit to reduce their loss.
Reasonably good weather in the producing regions of India, Vietnam and West Africa point to a good crop in the northern hemisphere, Pankaj Sampat of Samsons Trading told FE.
Kernel prices have dropped in the last one month on limited volume. If trade continues to be quite for few more weeks more, they may drift down further, he said. If the kernel market continues to be quiet as it has been for four weeks now, it is quite possible that some Indian processors might find it attractive to resell cashew to processors who cater to domestic market, he added.
While Indian exports for the current financial are expected to be down, import of raw cashew has been quiet high.
Exporters who were hoping for good contracts in the last quarter of 2009, were disappointed with retailers not covering for long.
Buyers are only buying for near contracts and not entering into long-term contracts. This brings in volatility in the market, Pankaj said.
Considering that importers and users had already started reducing inventories from mid 2008, this means that current inventories in importing countries are very low, even after low consumption has been accounted for.
With sellers refusing to lower their prices, trading during the important month of September and October has been low.
According to industry experts, buyers in Europe, Japan and Australia do majority of their buying for the next season in September and October.
The first quarter of 2010 will be a decisive period. If buyers feel that consumption would be back to normal level like other commodities, their demand would be significant, he added.
Shipments from Vietnam and India, the two largest exporters, have been lower in 2009. World cashew production in 2009 was more or less unchanged compared to 2008.