From: Pankaj Sampat [mailto[email protected]]
Sent: Sunday, November 06, 2011 2:39 PM
Subject: CASHEW MARKET REPORT - NOV 5, 2011


NOV 5, 2011


Cashew market was steady in Weeks 44 & 45. Small and medium processors sold W320 from 3.65 to 3.80 FOB. There was a fair amount of buying interest in this range but selling interest was limited and from a few small & medium processors only. Most of the large processors were quoting above 4.00 FOB (some sold few containers around 3.95 FOB). There was hardly any business in other grades but nominal values are W240 from 4.15 to 4.35, W450 and SW320 from 3.70 to 3.85, SW360 from 3.50 to 3.65, Splits & Butts from 3.15 to 3.30, Pieces from 3.00 to 3.15 FOB.

Indian domestic market is quiet – retail offtake before Diwali was lower than expected. Prices drifted a bit in late Oct but are now stable with some buying interest at the lower levels ahead of the marriage season. Vietnam’s local market – China – is showing some signs of activity but buyers are being selective due to quality issues in the last few months.

RCN market is reflecting the quietness in the kernel market – hardly any buying interest from processors for West African RCN stocks in India / Vietnam and new crops from Indonesia & East Africa. Prices are around 1550 for Tanzania/Indonesia, around 1500 for Guinea Bissau and around 1200 for other West African. Brazil crop is developing well – estimates range from 260 to 300,000mt. With wider area and longer arrival period, realistic estimate will be possible in Jan but it is certain that crop is much better than the disaster of 2010.

For last year or so - in a period of rising prices - USA & EU buyers have refrained from forward buying – they have been buying few months requirement at a time. At no stage, has any big volume been purchased for delivery beyond 3-4 months. Recent price decline from 4.70-4.75 to 3.70-4.00 during Aug/Sep has meant that buyers have withdrawn further into the shell. Although some buyers feel that current levels might be sustainable in the medium term, they are probably waiting to see whether there is any further drift before they step in to buy.

Due to the high prices and the uncertain economic situation, there is concern about the demand trend and this is making buyers wary of taking large positions. Even if offtake is lower by double digits, buyers will have to start buying soon for shipment Jan forwards as very little volume has been purchased so far.

Good crop in Brazil will ease the supply tightness to some extent but a real change in the supply situation from tight to comfortable will happen only if the 2012 Northern crops are good. Until that happens (Apr/May 2012) and RCN prices come down significantly, processors will not be in a hurry to sell at lower prices. On the buying side, buyers will not be keen to buy large volumes for longer period unless kernel prices come down a bit more or there is some indication about demand trend. So, the trend of buying for short periods can be expected to continue for the next 4-5 months and this should provide support to the market in the current range.

To sum up, we feel that market will move sideways in a narrow range for the next few months. There might be a small spike before end of the year if there is reasonable buying for first quarter 2012 shipments. Until the 2012 crops start, downside will be limited to few cents below the current range unless something dramatic happens on the economic situation or the RCN prices drop significantly before end of the year. It is futile to try & guess trend beyond that as there are too many factors - fundamental and external – that will affect the market movement.

Would appreciate your views on current situation, recent trades / offers, forecast of market trend (demand + price).... and any other news or 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]