Prices of cashew nut kernels came down another couple of cents over the past week. Where will it stop? Buyers are sitting on their hands while prices are coming down. The actual downtrend is only making the buyers more hesitant to buy, as they know that they possibly could have a better deal later.
Processors carrying long position on higher priced RCN are disappointed and are losing a lot of money under the current market circumstances.
Supply: current unsold/uncommitted stock in bonded warehouse is estimated between 75.000-125.000 mton. This product is mainly from Nigeria and Ivory Coast origin and priced at Usd 1100-1200 per mton. Relatively cheap but quality is ‘bad’. KOR around 40 or lower and a lot of 2nd grade product after shelling. Only small processors are picking up this product for shelling but a lot of them decided already to stop processing. These lower quality RCN are giving a lot of “off-grades”, wherefore there actually hardly is any market in China.
Medium and top packers seem to have sufficient stock for processing until end of the year. Some can even afford to wait buying new RCN until new crop from Vietnam and Cambodia. The stock in the hand of the processors is of better quality but on average also higher priced (Usd 1800-1900 per mton). The current market of Usd 3,40 per lbs basis FOB is creating a loss for those processors. The next crop from the Southern Hemisphere is around the corner. First indications from Tanzania are Usd 1700-1750 per mton for a KOR 53 (high quality). The current kernel market is not allowing those RCN prices but, as the Indian kernel market is higher prices, we expect buying interest and pressure from India who can afford paying higher prices for RCN while they have a big domestic market.
Demand: very slow. Nearly no demand. Stocks in Europe are very limited and significantly higher priced (Usd 3,80-3,90 per lbs for WW320).
Our recommendation is to take a serious look at 2019 positions and cover part of that. We are at, or coming close to, the floor of the market and in Dutch we have a saying that in case you wait too long, you will pay for it!