From: Pankaj Sampat [mailto[email protected]]
Sent: Sunday, July 17, 2011 2:07 PM
Subject: CASHEW MARKET REPORT - JULY 16, 2011


JULY 16, 2011

Cashew market was quiet in Week 29 – there was scattered activity with all markets. General prices levels were W240 from 4.85 to 4.95, W320 from 4.55 to 4.65, W450 and SW320 around 4.50, Splits around 3.95 to 4.00, Pieces around 3.80 to 3.90 FOB. There was good buying interest at the lower end of the range but except for some processors (mainly from Vietnam) there were few sellers at lower levels. Indian domestic market was also very quiet but some business was being done by top class processors.

RCN market was steady – good quality parcels are trading at high prices. Some processors who do not have adequate kernel sales or need cash are selling some parcels at lower levels. RCN arrivals into India & Vietnam in third quarter will be better but reduced labour availability will limit the conversion to kernels.

There is no change in the market outlook. If there is good demand in coming weeks – either from importing countries or domestic market – we might see prices moving up a bit in Aug/Sep. If demand is slow, prices will move in a narrow range around current levels. In last quarter of the year, market movement will depend on crop prospects & RCN prices in Southern Hemisphere AND contracting for end 2011 + 2012.

The only cause for a decline in kernel prices in 2011 would be if there is a big drop in kernel buying in the next 3-4 months.. This does not seem likely because reduced shipments from all origins in first half PLUS the trend of short term buying in the last 6-9 months means that inventories in importing countries are low. Even if the retail offtake in USA & Europe is lower than normal, importers (and some roasters) will have to continue buying from origin to fulfill their needs as forward buying has been very limited.

There is a lot of uncertainty about demand trends and this is affecting the buying pattern. So far, the impact of the higher prices on demand has not been as bad as feared. In most markets, part of the price increase has been passed on to consumers and in some markets, increase has been passed on in full. A part of the price increase - caused by higher processing costs - cannot be rolled back. Only if RCN prices come down, can there be a significant drop in kernel prices. This can happen only if 2011 South and 2012 North crops are both good OR the contracting for 2012 is very much lower than 2011.

Would appreciate your comments on market situation, views / forecast on demand trends, and any other news + information.

Regards,
Pankaj N. Sampat
SAMSONS TRADING CO
Mumbai - India
Phone +91 22 64564300
Mobile +91 98200 79015
Fax +91 22 26462346
email [email protected] / [email protected]