Munching cashew nuts may not come easy on the pocket as the popular snack moves into higher price range due to lower availability and robust demand. Erratic weather, declining yield and effort for value addition by African producers are leading to a tighter supply of raw nuts. India produces 6-7 million tonnes of raw cashews per annum and was until recently the leading supplier of kernels to the global market.
Apprehension of lower kernel availability through 2016 due to a shorter crop and slower movement through the supply pipeline led to a rally in the price of raw nuts, Pankaj Sampat of Mumbai-based Samsons Trading said. Import duty of 10% on raw nuts by the Centre also led to prices moving up from middle of March as the duty adds to cost of doing business, he added.
“Raw materials are over–priced and entry of new processors in Africa and India have further worsened the market for processors. Supply of raw cashew nuts has not grown as desired with only Western Africa producing more nuts,” Pratap Nair of Vijayalakshmi Cashews said.
Like many other commodities and specially tree-nuts we feel that we will see cashews moving up to a higher than historical price range. After having moved in a $3 to $3.50 per pound range for a long time, the new normal could probably be $3.75 to $4.25 with comfort zone around $4 per pound,” Sampat said.
“Raw nut prices have come down from the peaks of April 2016 but are still high compared to 2015 average and much higher than 2014 average. So, it would not be realistic to expect any significant decline in kernel price although we might see a dip from current levels when supplies pick up in third quarter. Dip cannot be large because the high price paid for raw nuts will not allow shellers to sell at much lower levels,” he added.
According to the last report 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 kernels and $3 billion for raw cashew.
Nair expects market to grow as consumers globally are looking for healthier and nutritious options that are free of pesticides and chemicals. Nuts are an ideal snack in itself and a good ingredient, he said. According to market reports, nut ingredients market, in terms of volume, is projected to grow at a CAGR of 5.7% from 2014 to 2019.