From: Pankaj Sampat [mailto[email protected]]
Sent: Sunday, September 18, 2011 4:51 AM
Subject: CASHEW MARKET REPORT - SEP 17, 2011


SEP 17, 2011

During week 38, the Cashew kernel price range (offers and even actual trades on the same day) widened to an extent which we have not seen before .- e. g. W240 from 4.55 to 4.85 and W320 from 4.20 to 4.60 FOB !! Small procesors in Vietnam were at the bottom end of the range, medium processors from Vietnam and India were in the middle of the range and the large processors in Vietnam & India were at the top end of the range. Brazil was around 4.45 FOB for W320. All of them sold but volumes at both ends of the range were small. The wide range of prices is causing confusion about trend of the market and also concern about quality of product. Buyers are cautious and at the same time, most medium & large proecessors are not ready to reduce prices to make sales.

Except for reasonable activity in Pieces, the Indian domestic market was also quiet. Retail offtake is slow but expectation is that it will pick up by end of Sep / beg of Oct. Wholesalers are waiting for retail offtake to improve before making additional purchases in origin. Reduced risk appetite and higher fund requirement (prices are substantially higher than last year) is making them keep inventories as low as possible.

There is absolutely no news from the supply side… Southern crops are expected to be normal except for some rumblings of damage in some parts of Indonesia. India/Vietnam processors will not have idea of East African RCN prices before late Oct / early Nov. Any sales they make before that will have to depend on prices paid at the end of the Northern crops with some cushion in case RCN prices do not come down in the last quarter.

Aug & Sept have been extremely quiet – some would say the quietest ever – and this has resulted in some processors losing patience and selling at lower levels in the last 2-3 weeks. But the majority of the processors are not willing to come down much from the levels traded in July, although they are willing to look at slightly lower bids. Their feeling is that inventories are low and buyers will have to come in soon to cover balance needs for 2011 and some portion of their 2012 needs (because nobody would like to have a completely open book).

If the quiet period continues till mid / late Oct, that will be a strong sign that consumption is badly affected and prices could start drifting lower resulting in weak demand at the beginning of the East African RCN season. If that happens, there will be little chance of prices moving up again.

On the other hand if there is reasonable (not necessarily a very strong) demand in the next four weeks, we could probably see the market strengthening again quickly because volumes from the low priced sellers is limited & for forward positions, buyers would look for safety of performance AND quality.

With normal crops in the South, supply pressures will ease but a real restoration of supply-demand balance will happen only if the 2012 Northern crops are good OR if there is a big drop in consumption in second half of 2011 / first quarter of 2012. So, a return to levels of late 2010 can be expected only by mid 2012 UNLESS there is a big negative development in the last quarter.

Overall, it is a very difficult - and at the same time interesting – time in the cashew market. It is very delicately poised and could move either way in the short to medium term. We would recommend caution to all in the chain. Until there is a significant improvement in supply & a reasonable picture of demand trend, comfortable trading range will not be established – volatility will continue. In such a situation, it would be too risky for any link in the chain to have totally open positions.

Please let us know your comments on the market situation, views & forecast on demand and market trend prospects.... and any other information / newss


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]