Cashew

Cashew market report May 2020

Cashew market report May 2020

On Thursday 14th May, Vinacas published the RCN import figures as well as the kernel export figures for the month of April 2020. On both imports as well as exports, this was a pretty big month in comparison to the previous 3 months this year.

As far as RCN imports are concerned, Vietnam imported a total of 106,553 mt which brought the total for this year to 313,730 mt, an increase of 4,77% in comparison to 2019.

As far as kernel exports are concerned, Vietnam exported 45,913 mt which brought the total exports for this year to 147,277 mt, a significant increase of 25,18% in comparison to 2019.

On the exports it is also worth mentioning that the quantity that went to the USA during Jan-April 2020 was 43,02% higher in comparison to last year.

  • Imports mainly came from Cambodia, Tanzania and Ghana.
  • Exports mainly went to the USA, The Netherlands and Singapore.

The cashew market is also greatly impacted by Covid-19 which is reflected in the numbers above.

India for instance has not only imported less RCN thus far this year, it consequently also exported a lot less kernels.

The domestic market in India has practically come to a standstill and it remains to be seen if domestic consumption will pick up once the national lock down (May 17th) is over.

Kernel market

The kernel market has been weak and continues to be weak. Mainly this is a result of the total lack of buying for nearby positions.

Roasters are covered, pipelines are filled, stocks in both the EU and the USA are abundant so it is difficult to get anything going for the shipments May, June, July.

The market is in a situation whereby Vietnamese shippers are desperately trying to sell their ready processed kernels in a market that does not need any and we are seeing prices for W320 from BRC shippers continue to slide downwards to levels of USD 2,80 per lb FOB.

This in contrast to 2-3 weeks ago when the market heard about the news that the Government of Ivory Coast was going (or considering) to buy 200,000 mt of RCN from the farmers at CFA 400.

The kernel market which saw a low of USD 2,60 immediately rallied to levels of USD 3,00 and higher however as mentioned we are now seeing the lower levels again of USD 2,80 per lb FOB.

We must admit that we do not fully understand this. Obviously, if one has product to sell and obligations to meet, we do understand that one looks to sell as quickly as possible.

However, other news from IVC was definitely not very good. The estimate of this year’s crop was reduced significantly. Where guesstimates of a crop of 900,000 mt + were made several months ago, the estimates now are that the total crop might not exceed 800,000 mt and moreover the quality is not as good as expected.

The Vietnamese own domestic production of raw cashews has almost been used completely. Cambodia has already exported 152,030 mt to Vietnam and is almost sold out as well. Vietnam will therefore be dependent on imports from West-Africa where the major origin, IVC, has a disappointing crop – quantity as well as quality wise.

Guinea-Bissau is about to start exporting but prices from GB are much higher than the current prices available in the market from Nigeria, Ghana and IVC. Obviously, the quality and outturn from GB is better and much higher than the other origins but the prices from GB for their RCN definitely do not correspond with kernel prices of below USD 3,00 per lb. Still Vietnamese shippers offer at the lower levels as mentioned.

In this respect it is understandable that Vinacas is recommending its members to try and not sell off their products to avoid possible losses.

Prices / prediction

On the buying side, as mentioned things are quiet. Most roasters are very well covered for the next 6-9 months and are already looking at 2021. There is some uncertainty of course of how consumption will develop in the next 6-12 months. With the world economy in a downward spiral and so many people losing their jobs, it is fair to expect a much lower cashew consumption in both the EU as well as the USA.

With less money to spend consumers will look for cheaper snacks such as potato chips and peanuts and perhaps even almonds and other nuts which markets are obviously also affected by the Covid-19 pandemic.

It is very difficult to try and predict the market.

Nearby we do not see too much upside. As mentioned, demand is hard to come by and with Vietnamese shippers trying hard to sell their production, we think the market will trade between USD 2,75 and USD 3,00 per lb FOB.

For later this year as well as next year, with offered prices slightly higher than the nearby, we think that these are excellent levels to start buying at. A lot can happen between now and next year May and as we always say, especially with today’s price levels; the upside is way bigger than the downside.

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Do you have any questions or comments after reading this report? Please feel free to send us an e-mail at bnoorland@cornhouse.nl or call us at +31 10 206 1930. We look forward to hearing from you!

Ms Cashew, Sir Peanut

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