Supply shortage unlikely to push up cashew prices

Written by RajeshRavi | Kochi | Updated: Oct 16 2012, 08:03am hrs
Global cashew supply in the current financial year is likely to be lower by 5% due to erratic weather, says a report of the International Nut & Dried Fruit Council (INC). However this shortage is unlikely to fuel rise in prices of nuts, say traders.

INC estimates kernel supply in 2012-13 to be around 5,28,572 tonne against 5,56,668 tonne in 2011-12. Indian supply is estimated to drop to 1,35,000 tonne from 1,50,000 tonne in the last financial year, while supply from Ivory Coast is estimated to drop to 85,000 tonne from around 98,000 tonne, says the report. Erratic weather is the main reason for the lower supply. In Ivory Coast, rains were early leading to lower yield and inferior quality, Pratap Nair of Vijayalakshmi Cashews, one of the oldest and largest cashew-exporting houses, said.

The drop in supply is likely to be balanced by the lower consumption. Demand for cashew is seen lower in most of the markets, he added. Cashew lost significant market share in 2011 due to high prices and reduced availability. Prices of W320 grade touched $4.50 per pound in 2011, but declined to $3.20-3.30. Consumption of snack nuts actually fell by 11% in the US in 2011 against the annual growth of 2-3 %. Cashew nut consumption has taken a major hit due to lower than estimated buying from West Asia and China. While the Western market has been consuming lower than the normal level for the past three years due to economic compulsions, the lower demand from South East Asia and Middle East has been surprising.

Tensions in Iran and Syria have led to lower trade with West Asia. Iranian consumption of cashew has been hit and so has its supply of pistachios, which is a competing nut, Pratap Nair said. India is the worlds largest consumer of cashew nuts with trade estimates of consumption ranging from 170,000 - 190,000 tonne. It is also one of the largest processor and exporter of kernels.