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[bean2000]

From: Pankaj Sampat [mailto[email protected]]
Sent: Sunday, October 02, 2011 2:58 AM
Subject: CASHEW MARKET REPORT - OCT 1, 2011


OCT 1, 2011


After moving up about 10% during Jun-Jul and moving sideways in Aug/early Sept, Cashew prices came down about 7-10% in the last two weeks of September. Volume traded was not large and most of it was for nearbys.

During week 39 & 40, offers and trades have been in a very wide range with a difference of 6 to 7% between the lowest & highest price – on the same day !! Such a wide range is making it more difficult than usual to understand the market. W320 are being offered & traded between 4.05 and 4.20 from Vietnam and 4.20 to 4.35 from India. Prices for Brazil are at or above the higher end of the range as they do not seem to have much to sell for nearbys. Not much trade in other grades but differentials are normal – premium of 25-30 cents for W240, discount of 10 -15 cents for W450/SW and 50-60 cents for Splits / Butts / Pieces.

During this week, there has been a slight pick up in Indian domestic demand – price for Pieces moved up by about 5%. Next two weeks will give an idea about trend of demand for the main festival and marriage season.

Spot parcels of West Africa RCN are trading at reasonable levels in India due to good demand from small shellers who cater to domestic market. RCN traders have unsold African RCN in Vietnam - with the recent kernel sales by small & medium processors, there might be some pick up in RCN activity there. Indonesia RCN price came down from $ 2000 to $ 1800 due to (a) lack of buying interest and (b) lower quality reports.. Tanzania auctions should start mid Oct but there are rumours of possibilities of some delay. Mozambique movement will not start till Jan – so any price for Mozambique RCN before that is entirely speculative. Brazl is expecting a normal crop.

Good 2011 Southern crops might ease the tight supply position in first quarter but a real restoration of supply-demand balance can happen only in mid 2012 provided all the 2012 Northern crops are good. Or there is a big drop in offtake in last quarter 2011 and / or first half 2012.

Most of the recent kernel business has been for nearby shipments – if offtake in Sep/Oct is not as bad as feared, some more buying for Nov/Dec shipments can be expected. There has been very little business for FH 2012 shipments and it is expected that some buying – at least for the first quarter – will happen in the next few weeks. Buyers are waiting to see how low the market can go and shellers are reluctant to sell at lower levels because they do not know what price they will have to pay for RCN in the last quarter for first quarter processing !!!

There are some parallels between 2008 & 2011 – historic high kernel prices in middle of the year + drift in prices in third quarter + international financial crisis in Sep/Oct. But there are two vital differences – in 2008, (a) price rise in midyear was sudden + based on defaults and (b) by Sep/Oct, buyers were well covered for next 6-9 months and so market was not able to absorb the selling pressure in the last quarter. This time around, the price increase has been gradual over a period of almost a year PLUS the extent & period of forward cover is much lower due to the continuous rise in prices and fears of demand decline. Also, processing costs are much higher than three years ago. So even if the financial situation continues to be bad, price decline may not be as big as 2008.

Overall, it seems that the uncertainty of demand + currency movements + financial situation will keep the market volatile for next 2-3 months. Increased trouble in financial markets will affect retailer sentiment resulting in lower contracting + drifting of prices. If things stablise or if demand decline is not as bad as feared, it could trigger a firming of the market. The volume + frequency of buying during Oct/Nov for the next few months requirement will determine whether prices will drift lower or move upwards to the higher end of current range.

Kindly let us know your comments on the market situation, views & forecast of demand & market trend for end 2011 / early 2012 and any other infromation / news


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]