With the upward swing in the exports of cashew kernels in December, due to the festival/winter demand and the decline in its unit value, the overall squeeze in the shipments during April-December 2009 from that of the same period the previous year dropped to 2,026 tonnes.
As against 84,079 tonnes valued at Rs 2,316.44 crore in April-December 2008, exports in the same period in 2009 were 82,053 tonnes valued at Rs 2,196.77 crore. The unit value dropped to Rs 267.73 a kg from Rs 275.51, Cashew Export Promotion Council of India (CEPC) sources said.
However, in December 2009 shipments moved up to 10,136 tonnes valued at Rs 269.27 crore from 8,272 tonnes valued at Rs 225.01 crore in December 2008, they said.
“There has been improvement in demand in recent months due to the decline in the unit value of cashew kernels when the prices of other tree-nuts are on the rise and the gradual recovery from the economic recession in the major consuming countries,” Mr Sasi Varma, Secretary, CEPC, told Business Line.
However, imports of raw cashew nuts (RCN) in April-December 2009 increased 1,21,963 tonnes to 6,39,536 tonnes valued at Rs 2,449.89 crore from 5,15,573 tonnes worth Rs 2,208.97 tonnes in the same period in 2008. Thus, the value of imports in April-December 2009 has surpassed the export earnings by Rs 253.12 crore in the corresponding period last year.
The reasons attributed by the industry for the increased imports are increased availability of RCN and the drop in its prices in 2009. The unit value last year was at Rs 38.43 a kg as against Rs 42.84 the previous year, they said.
The second week of 2010 saw cashew prices drifting a few cents lower, Mumbai-based trading sources said. Compared with $3 at the end of 2009, large processors were quoting around $2.90 (f.o.b.) for W320. Some processors have even sold at around $2.80 (f.o.b.) and there are reports of some sales at as low as $2.75 (f.o.b.).
There was not much change in other grades – W240 around $3.05, W450 around $2.55, SW320 around $2.65 and SW360 around $2.50 (f.o.b.). Brokens continued to be tight with no change in price.
Except for the purchase of 10,000 tonnes of Mozambique/Tanzania RCN by the Kerala State Cashew Development Corporation, there was not much activity in the RCN market in the last 2-3 weeks due to the quiet kernel market. Processors who have bought reasonable quantities during Nov/Dec are looking to make some kernel sales but the buying interest is limited and buyers' ideas are much lower than the prices paid for the RCN.
“If the kernel market continues to be quiet and soft as it has been for four weeks now, it is quite possible that some Indian processors might find it attractive to resell RCN in coming weeks to processors who cater to domestic market,” Mr Pankaj N. Sampat, a Mumbai-based dealer, told Business Line.
Weather conditions in India, Vietnam and West Africa have been good so far and if nothing dramatic happens in coming weeks, “we can expect reasonable crops in the Northern Hemisphere. However a realistic estimate of crops will not be available till April,” he said.
Kernel prices have dropped by about 15 cents a lb in the last one month on limited volume. If it continues to be quiet for a few more weeks, they may drift another 10-15 cents. “We would see that as a good buying opportunity because (1) prices would be mid 2009 levels (2) prices of other nuts are not going down (3) lower levels may not be achievable unless RCN prices come down substantially when new crops start.”
Since middle of 2008, volume of forward business is quite low and, in fact, most of the business is being done for near-bys (2-3-4 months ahead). “This increases the potential for sharp upward and downward price movements depending on who needs to have something on the books (and when) i.e. processors before/after making RCN purchases or buyers before/after making contracts with roasters/retailers,” he said.
Overall, feeling is that “market will settle in a $2.75-$3 range for 2010, towards the lower end of the range if buyers can refrain from making big purchases till Mar/Apr and tending to the higher end if they have to start buying before that. Any move outside this range will be temporary and can be sustained only if there is something wrong with the upcoming crops or if the upcoming crops are very big,” he predicted.
Source : Business Line