Cashew demand remains sluggish on higher prices of raw nuts

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Kochi | Published: October 17, 2015 1:04:07 AM

India produces 6-7 million tonne of raw cashews per annum and processes nearly 60% of the cashew kernels consumed globally.

Cashew market is sluggish due to higher prices of raw cashew nuts (RCN) and resistance of buyers to the current kernel prices. Traders said that current uncertainty in economic situation makes it difficult to judge demand and market trend for the coming months.

India produces 6-7 million tonne of raw cashews per annum and processes nearly 60% of the cashew kernels consumed globally.

“Raw cashew prices are very high and not in line with the kernel prices. Demand for nuts is low at the current prices and likely to remain sluggish for some time,” Pratap Nair of Vijayalakshmi Cashews told FE. He said that the  economic situation in Europe and West Asia is adding to the sentiments.

“Euro has depreciated with respect to dollar and consumption is seen lower in the West Asia market. Vietnam is aggressive in the market due to their lower processing cost and Indian exporters are finding it difficult to compete,” he said.

Pankaj Sampat of Mumbai- based Samsons Trading said,”On average, RCN prices in 2015 have been 20-25% higher than 2014 whereas kernel prices have been almost the same (may be 5% higher). Between now and March 2016, RCN availability will be from Indonesia, East Africa, Brazil which account for only 25% of world production. Traditionally, southern crop prices are higher than northern crop.”

“Although kernel buying interest was reasonable but not very strong in the last 3 months, prices were steady in a narrow range and forwards were trading few cents higher at all times.  This seems to indicate that below a certain level, selling interest is limited.  High RCN costs and regular buying interest from some market or the other are providing a floor to the market, “he added.

Pankaj said that  the market could remain steady in the coming weeks but there is certainly a possibility that prices could move up a bit if there is a good demand for year-end top-up requirements and first half 2016 shipments. “We would not be surprised if prices cross the higher end of the range seen in the last 6 months. There are very little chances of decline from current levels in the foreseeable future,” he said.

Pratap said that high cost of processing is hurting the Indian cashew nut industry and many exporters are moving their base to Africa. In India, cashew processing is a labour intensive process with women constituting almost 90% of the total labour force. He added that the reduction of export incentives has weakened the sentiments.

According to reports of the Vietnam Ministry of Industry and Trade (MoIT), trade value of the global cashew sector was estimated at around $8 billion including $5 billion for cashew nuts and $3 billion for raw cashew. Vietnam was forecast to earn $2.2 billion from shipping nuts and holds 50% of global cashew trade value.

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