Cashew KERNEL market has been boring so far

The Cashew KERNEL market has been boring – moving sideways in 4.75-5.00 FOB range for more than 6 months. And 4.50-5.00 range for more than a year (except for 1 month when it peaked in the 5.20-5.40 range in May 2017).
Currently – in Weeks 6 to 8 – the range of kernel prices has been W240 from US$ 4.95 to 5.25, W320 from US$ 4.75 to 5.00, W450 from US$ 4.50 to 4.75, SW320 from US$ 4.50 to 4.70, Splits from US$ 4.50 to 4.65, Pieces from US$ 3.70 t0 3.85 FOB.  Business is being done at all levels within the range !!
Couple of trends noticed in the last 12 to 18 months : Grade-wise price differentials have narrowed significantly. Some grades are just not available.  Same grade differentials between different processors have widened considerably.
For the last few years, RCN prices have been moving up steadily with a big jump in 2017.  During 2017, the prices moved up from US$ 1500-1700 to US$ 2350-2450 with an average of US$ 1800-1900.  Total rise in RCN prices in 3 years is over 75% vs an increase of about 40% in kernel prices.
Current RCN prices range is  US$ 2050 to 2200 for Nigeria, US$ 2125 to 2200 for IVC,  US$ 2250 to 2350 for Ghana. Small
quantities sold to some processors.  Most are waiting for better indication of crop prospects & RCN price trend and kernel demand & prices.
Going forward, market trend for 2018 is very unclear :
1) Although kernel prices dropped 10% by end of 2017 from the peak of 5.25-5.50 FOB seen in mid 2017, RCN prices have continued to be high in second half of 2017.  In fact after softening in Dec/Jan 2017, RCN prices have inexplicably gone up in the last 2-3 weeks just before the commencement of the period – March to June – when over 75% of the World crop is harvested.

2) The increase in Cashew prices has been passed on to retail level – partly in some markets and fully in some others (mainly Asia which is the biggest consumer). So far, there has not been any indication of big decline in off-take.  It is not certain whether this trend will continue with the market accepting a range around 4.50 to be the new normal.

3) Prices of Almonds & Walnuts have increased from the low levels seen in 2016 / early 2017.  Prices of other Snack nuts are steady at the higher levels. Although Cashew prices have been going up for last 18-24 months, current prices are below the peak of mid 2017 and close to the average of 2016. 

4) So far, news from all origins is for normal to good crops. Vietnam & Cambodia are talking of bumper crop after 2 years of disappointing crops. This could mean that they may not be keen buyers for African RCN when they return from holidays next week unless there are some processors who want to get hold of the better quality first arrivals. There is some concern about timing of movement of IVC crop due to the increased tax/duties and some new rules for supply to local processors.  If this is not resolved quickly, prices of other West African RCN could move up. Development and activity in March will determine range of 2018 RCN prices.
To sum up, we expect that kernel prices will continue in the current range with some possibility of a decline to 4.25-4.50 FOB if RCN prices dip below US$ 2000 in the new 2 months.  There is nothing on the horizon pointing to a jump in kernel prices.
At the same tine, we do not see scope for any big decline UNLESS there is a big fall in activity in kernels during Mar Apr which could result in reduced RCN buying and lower RCN prices.  The tipping point would be a drastic fall in demand which does not seem likely at this stage (but we cannot rule out the Black Swan !!)
To end this report, here are last 3 years statistics from the 2 large kernel suppliers (India & Vietnam) :
Vietnam Import 866,968 1,140,076 1,312,424
Vietnam Export 327,452   349,678    362,687
India Import 969,855 714,704 690,190
India Export 105,752  80,837  88,304
This shows (1) India share of imports continues to decline – big drop in 2 years (2) India exports in 2017 are better than 2016 but still significantly lower than 2015 and the range of 110-120K of past several years (3) Vietnam is increasing both imports & exports (4) assuming Vietnam 2017 crop of 350K, there is not much stock of RCN or kernels in Vietnam

Also, there are no reports of any large inventories in the the importing countries which have been buying few months need at a time which means that even with higher prices, demand has continued to grow (or at least been steady) to absorb the available supplies.  Why this has been happening despite lower prices of other nuts is a million dollar question !
All in all, we are in for some interesting times !!
Pankaj N. Sampat
San Francisco – USA & Mumbai – India
Phone +1 415 881 0633 / +91 98200 79015