Cashew Price Analysis – 2005 to 2014 (Jan 2015)

During 2014, we have been very irregular with our reports – main reason being that for most of the year, cashew market has been so quiet that it has been difficult to find something to write about !!!!

To start 2015, we thought we would attempt an analysis of how the cashew market has moved in the last 10 years… And this is the result of our efforts :

1. 2005 – Prices moved within a narrow range of 2.55 to 2.35 FOB for most of the year and dropped to 2.10 FOB in the last quarter of the year. Average for 2005 was 2.325 FOB with a trading range of 21%
2. 2006 – Throughout the year, prices moved in a very narrow range of 1.95 to 2.10 FOB. Average for 2006 was 2.05 FOB with a trading range of 7%
3. 2007 – For most of the year, market was in 2.05-2.20 FOB range and moved up quickly to 2.65 FOB in the last quarter. Average for 2007 was 2.35 FOB with a trading range of 29%
4. 2008 – This was an exceptional year (to say the least). In the first quarter, prices inched up from 2.65 to 2.95 FOB. Middle of the year, it jumped up to 3.60 FOB and drifted to 3.30 FOB by end of third quarter. In the last quarter, it crashed to 2.35 FOB. Average for 2008 was 2.975 FOB with a trading range of 53%
5. 2009 – In the first quarter, market was stable around 2.30 FOB and moved up to 2.60 FOB in the second quarter. It was stable in the third quarter between 2.60-2.70 FOB and moved up to 3.00 FOB by end of the year. Average for 2009 was 2.65 FOB with a trading range of 30%
6. 2010 – Market was volatile in the first quarter – moved from 2.90 to 2.60 and back to 2.90 FOB. In the second quarter it was moving around 3.00 FOB. Prices moved up to 3.40 FOB at end of third quarter and 3.80 FOB by end of the year. Average for 2010 was 3.20 FOB with a trading range of 46%
7. 2011 – This was another landmark year for the Cashew trade. After a relatively steady first quarter (3.80 to 4.00), market moved up to 4.30 in second quarter and further to 4.70 in Jul/Aug before drifting to 4.50 during Sep and crashing to 3.80 in the last quarter. Average for 2011 was 4.25 with a trading range of 25%. As we said in one of our reports in 2010/11, the Cashew market was in uncharted waters (probably in the Bermuda triangle !!)
8. 2012 – After 2 years of a roller coaster ride, cashew market took a breather in first half of 2012 trading around 3.50 FOB except for a short lived uptick to 3.75-3.85 FOB in May. Market started drifting downwards from mid/late Jun and was around 3.10 FOB at the end of the year. Average for 2012 was 3.35 with a trading range of 22%.
9. 2013 – A year in which prices moved sideways. Market started the year around 3.30 went up to 3.50 in second quarter and closed the year at 3.35. Average for 2013 was 3.40 with a trading range of 6%
10. 2014 – was more of the same with a slight up-tick in third quarter followed by unprecedented quiet in the last quarter. Market started the year around 3.30 and traded in the 3.30-3.50 range for most of the year except for a very very brief period in Sep/Oct when business was done around 3.70. Average for 2014 was 3.50 with a trading range of about 12%.

Summary of analysis :

Year	Low	High	Average	Range
2005	2.10	2.55	2.325	21%
2006	1.95	2.10	2.05	7%
2007	2.05	2.65	2.35	29%
2008	2.65	3.60	2.975	53%
2009	2.30	3.00	2.65	30%
2010	2.60	3.80	3.20	46%
2011	3.80	4.70	4.25	24%
2012	3.10	3.80	3.35	22%
2013	3.30	3.50	3.40	6%
2014	3.30	3.70	3.50	12%

Attached Excel Sheet which has gradewise prices on monthly basis from 2005 to 2014 will be an useful resource for further analysis.

CASHEW KERNEL PRICES – 2005 TO 2014

Some observations from our side :

A) First observation is that there is NO PATTERN – annual or seasonal – for Cashew price movements !!

From 2005 to 2007, kernel prices were stable / soft during second and third quarters when Northern Hemisphere crops are harvested – this is logical because these crops contribute nearly 75% of the world production.

2008 was an exceptional year when the trading range was 53%. Prices jumped about 25% in few weeks in second quarter (during the peak harvest season) due to delays & defaults and crashed by over 30% in few weeks in last quarter due to the global financial crisis.

In other 6 years, kernel prices moved up (or were at least steady to firm) during the Northern Hemisphere crops

B) In most of the years, trading range has been 20 to 30% (except for 2008 – 53% and 2010 – 46%). Last two years (2013 & 2014) have been the longest period when trading range was around 10% (exception was 2006 when trading range was 7%).

C) The rally in kernel prices from 2.70 in March 2010 to 4.70 in July 2011 was the longest (period) and biggest (value). Most of it was gradual and based on a supply shortage accentuated by delays in movement of RCN from Africa to India & Vietnam coupled with strong growth in Asian demand. But, the big jump in price from 3.70 in March 2011 to 4.70 FOB in July 2011 was the last straw on the camel’s back. It had disastrous impact on cashew usage in the 2 main importing markets. Prices crashed from 4.70 in July 2011 to 3.70 in Dec 2011. During 2012 there was gradual drift in price from 3.60 to 3.10 by Dec 2012 (except for a brief spike from 3.40 to 3.80 in Apr-Jun 2012. Over a period of 18 months (from Jul 2011 to Dec 2012), the market gave up 80% of what it gained in 15 months (from Mar 2011 to Jul 2011).

D) During 2013 and 2014, market has been moving sideways in the 3.20 to 3.50 range except for a brief period in Sep/Oct 2014 when business was done in the 3.50-3.70 range

E) There were 2 big crashes in the last 10 years for different reasons. The crash in 2008 was due to the global financial crisis. The crash in 2011 was because of “demand destruction” due to the very high prices. In all the other years, cashew prices have been moving up or down gradually with periodic spikes and dips. The long term trend has been upward shift in the trading range as we will see at the end of this report.

F) In the last few years, there has been a power shift on both sides of the cashew market – supply and demand. India is no longer the largest supplier to the world market – that position has been taken by Vietnam for kernels and West Africa for RCN. On the demand side, USA & EU continue to be large buyers but they have been overtaken by Asia which is now the largest consuming region (India is the largest consuming country). This has altered the market dynamics – relative power of each region to determine market trend has changed. It is now much more a spot & nearby market – activity in many more origins and markets influence the price than in the past.

G) Another interesting aspect has been the price differential for broken grades. Historically, Splits have been at a discount of less then 50 cents per lb to W320 and Pieces have been 10-15 cents below Splits. This differential widened to over 1 dollar between W320 & Splits and over 50 cents between Splits & LWP during 2012, 2013 and first half of 2014. This was a combination of (1) lower usage due to the very high prices in 2011 and (2) increased availability due to mechanisation of processing. Improvement in processing did bring down the production of brokens but it took some more time to use up the built up inventory. By middle of 2014, differentials started to narrow and now we are back to traditional levels !!!

H) If we remove the aberrations of 2008 and 2010/2011, we will see that cashew market has moved in following range :

2.00 to 2.50 from 2005 to 2007
2.50 to 3.00 from 2008 to 2011
3.00 to 3.50 from 2012 to 2014

What will be the range for 2015 ???

In the last few years, RCN prices have moved to a higher range and there is increase in processing costs also. There is very little growth in production and there is steady growth in usage due to relatively stable prices (compared to other nuts). We expect that range in 2015 would be slightly higher – say 3.25-3.75 or (even 3.50-4.00 if there is good buying interest in the first quarter leading to steady RCN prices during 2015).

WOULD APPRECIATE YOUR COMMENTS, VIEWS, THOUGHTS FOR A BETTER UNDERSTANDING OF THE MARKET PROSPECTS

SOURCE: SAMSONS

Cashew Market Report – May 19, 2015

Posted on May 20, 2015 by psampat

The last two months have seen a sea change in sentiment in the Cashew Market. There has been a significant increase in prices after a very long period of the market moving sideways in a narrow range.

Currently – middle of May 2015 – range of prices is W240 from 3.80 to 3.95, W320 from 3.55 to 3.75, W450 from 3.40 to 3.50, Splits from 3.15 to 3.25, Pieces from 3.00 to 3.15 FOB with hardly any offers at the lower end of the range.

An interesting phenomena has been the narrowing of differentials between grades. Premium for large wholes and discount for lower grades has narrowed significantly. Demand for large wholes is limited. Availability of lower grades is very tight. In fact, in the Indian domestic market, Splits and Pieces are trading at prices higher than international market for some Whole Grades (this has happened after several years).

Until middle of March, everybody was expecting that Cashew Market in 2015 would be a continuation of what we have seen since the second half of 2012. Crop prospects were looking okay. RCN traders were willing to make sales at reasonable price in line with kernel market. Shellers were not keen to buy because the season was just beginning. Kernel buyers did not feel need to lock in volume for long spreads in a market which was going nowhere. There was nothing on horizon pointing to any major change in prices or market trend.

In the RCN market, things started to change by middle of March. There were reports of lower kernel yields in many areas. Delays in shipments and fears of further reduction in yields in later arrivals forced shellers to pay higher prices to secure supplies of early arrivals.

This is one of the years in which RCN prices have been going up during the peak harvesting period of the Northern crops which contribute 75% of the World Production. In previous years when this has happened, there have been reasons like definite short crops or movement issues due to disturbances in growing areas. This year is a mystery !!!

One thing which is different this year is the increase in number of RCN traders (also shellers). Although the quantity each new player will or can buy is not large, the cumulative effect has lead to more competition in RCN buying leading to people paying prices which are totally out of whack with kernel prices. Traditional players are forced to follow the market to meet their requirements.

On the kernel side, availability was comfortable in the first quarter. Buyers were able to get what they needed. There was no pressure to pay higher levels to lock in supplies for forwards. By end Mar/early Apr, offers started becoming scarce. With the delays in RCN shipments and increase in RCN prices, shellers were reluctant to make new sales and started increasing kernel offers. Some buyers who needed product for second quarter started paying higher prices and this prompted some business for second half at a small premium. Today, even those premium prices seem low !!

In the last 2 months – from middle of March to middle of May – RCN price has gone up by 250-300 dollars per ton which is equal to 45 to 55 cents per lb of kernels. In the same period, kernel prices have gone up by about 20-30 cents. This leads us to believe that unless there is a big decline in RCN prices, shellers will not be able to reduce kernel offers.

What can we expect in coming months ?

Given the fragmented production base, it is impossible to say what the crop is until major portion of the African crop is shipped. Since shipments are slow, we will have a reasonable idea only by Aug. One thing is more or less certain, kernel yields are lower in almost all African origins. If shipments pick up in May/Jun, RCN prices could come down a bit. But that may not be enough to compensate for decrease in yield.

We expect kernel availability to be lower than normal in May/Jun. Hopefully, things will be better after July but by that time, buying will be at its peak in Asia (including the largest consumer – India – which is predominantly a “ spot “ market). In the third quarter, we can also expect some buying from importing countries to fill uncovered positions for 2015 and some portion of early 2016 requirements.

Next few months will be interesting. There are several factors which will determine the Cashew Market trend i. e. RCN prices, roaster & retailer strategy, trends in other nuts, general economic situation in the main importing countries and currency movements.

In our JAN 2015 analysis of Cashew price movement for 10 years, we saw that prices moved in the following ranges (except for the aberrations in 2008 and 2010/2011) :

2.00 to 2.50 from 2005 to 2007
2.50 to 3.00 from 2008 to 2011
3.00 to 3.50 from 2012 to 2014

At any time, it is dangerous to predict what will happen in a market (for anything). Specially for our “crooked” nut (!!) at a time when supply position is not very clear. But based on a gut feeling we are willing to hazard a guess that in coming months, price for W320 will tend toward the middle or higher end of the 3.50-4.00 range with very little chance of it going below 3.50.

We would appreciate your comments on the market situation, supply side factors, usage prospects and your views + forecast of demand and price trend in coming months.
Source: Samson

Cashew processors shutdown in droves

Almost all the major cashew processing companies in the country have shut down their operations as the result of many challenges, including lack of raw nuts supply and the infamous power crisis.

Of the 12 processing companies in the country’s cashew hub -- the Brong Ahafo Region -- only one, Mim Cashew Nuts Limited, remains in operation.

The processors say they have been bogged down by a plethora of challenges, including insufficient supply and skyrocketing cost of raw cashew nuts, high cost of credit, inefficient processing methodology, and the niggling erratic supply of power.

Kona Agro Processing Limited at Awisa near Wenchi is one of the companies that have suspended operations.

Its Managing Director Raymond Taylor told the B&FT that business is so uncompetitive that management decided in August 2014 that operations had to be suspended, leading to 185 people losing their jobs.

Amidst the insufficient local production of the commodity, he said, processors are seriously feeling the pinch from the 2013 ban by Ivorian Authorities on the importation of cashew nuts from that country.

Cashew industry players in Ghana (exporters and processors) trade around 150,000-200,000 metric tonnes annually and rely heavily on RCN from Cote d’Ivoire and other West African countries to supplement local production, which hovers around 40,000-50,000mt.

Mr. Taylor indicated that before the Ivorian ban came into force they used to buy a metric tonne for US$700, but currently the same quantity sells for not less than US$900.

While the development, in effect, is good for farmers of the produce, it is badly affecting the business of processors, he said.

Another challenge the industry faces, he said, is the lack of access to credit as banks remain sceptical about lending to agribusiness.

Mr. Taylor also believes that the processing methodology employed locally needs to be moved away from the labour intensive Indian style, which increases production costs.

“Going forward, the Vietnamese processing methodology that thrives on automation and mechanisation would be appropriate for the industry to increase output with limited labour,” he said.

“The Indian style was supposedly good for Africa because of lack of electricity and the like, but gradually it has become outmoded for the industry. When we started operation, we were producing 4mt per day with 300-330 people. But in Vietnam, you can process the same 4mt a day with 100 people,” he added.

source: Ghanaweb

A record 47,000 tonnes of macadamias forecast for 2015 Australian crop, despite cyclone

Australian macadamia growers are on track to produce a record crop this year.

The peak industry body has released an initial forecast of 47,000 tonnes of nut in-shell.

Media player: "Space" to play, "M" to mute, "left" and "right" to seek.

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AUDIO: Jolyon Burnett says 2015 is forecast to deliver Australia's biggest macadamia crop to date (ABC Rural)

The Australian Macadamia Society's chief executive officer Jolyon Burnett said the total crop last year weighed in at 43,600 tonnes.

"It's a very pleasing result, given all the hard work and effort that growers have put in this season," he said.

"We've had a 46,000-tonne crop and it's worth remembering that was when there were a lot less trees and the trees were not as old as they are now.

"In terms of the per tree or per hectare basis, it's probably not the biggest crop we've had, but in terms of absolute volume, if we make that 47,000 tonnes it certainly will be."

A year with a good yield and a good price comes along very rarely and to have your crop virtually wiped out in that sort of a year is absolutely heartbreaking.

Jolyon Burnett, chief executive officer, Australian Macadamia Society

Mr Burnett said the damage caused to farms in Central Queensland by ex-Tropical Cyclone Marcia would have little impact on the overall national crop.

"We have three or four growers around Yeppoon and they've all suffered devastating losses and it's absolutely heartbreaking," he said.

"A year with a good yield and a good price comes along very rarely and to have your crop virtually wiped out in that sort of a year is absolutely heartbreaking, and our thoughts are with them.

"But the good news is across the entire industry we really were extremely lucky and in terms of the total crop very little damage has been done.

"The Hancock Farms has a farm at Rockhampton that sustained a bit of damage, but by and large the industry escaped relatively unscathed."

PHOTO: Jolyon Burnett says the forecast for the national macadamia crop this year is 47,000 tonnes of nut in-shell(Kim Honan)

The heavy rainfall in northern New South Wales delayed the start of harvest, with growers still struggling to get machines onto the orchard floor.

"There's been a few harvest rounds, but in general I think we'll have to wait a couple of more weeks to see harvest begin in earnest," Mr Burnett said.

Seventy per cent of the crop will be exported, with a greater number of macadamias ending up on the Chinese market.

In 2014, nearly 25 per cent of the crop was exported to China. Mr Burnett said the country's demand for the in-shell product continued to grow.

Mr Burnett expected to see a greater percentage of the crop exported to China this year.

"The Chinese public eat nuts by and large in-shell, so rather like we eat peanuts, and that's a really strongly growing sector of the market and delivering good prices at the moment," he said.

Demand is strong across all sectors of the industry and our biggest challenge is that we can't grow enough to satisfy that growing demand.

Jolyon Burnett, chief executive officer, Australian Macadamia Society

"But we still have a very strong demand for the kernel market and I suppose in some way it's an enviable position to be in, to have to make a choice about which markets we service."

Mr Burnett said the demand from China for the in-shell product would put pressure on the kernel market.

"Demand is strong across all sectors of the industry and our biggest challenge is that we can't grow enough to satisfy that growing demand," he said.

"But it does allow processors and exporters to look across a whole range of markets and to try and maximise the return by going for highest value markets, but that has to be balanced also to make sure we take care of long-term sustainable markets that we know that will be there in five, 10, 20 years' time."

Source:http://www.abc.net.au

0 Tech transfer to Africa could kill Vietnam’s cashew industry

A plan by the HCM City University of Technology to export cashew processing technology to Africa has faced strong opposition from Vietnamese officials, who believe the move will kill one of Vietnam’s important industries.
A few days it was announced that the HCM City University of Technology has signed a contract on transferring cashew nut processing technology to Africa. The information was confirmed by Vinacas, the Vietnam Cashew Association, which said the project was signed at a cashew processing equipment exhibition, Sietta 2014, held at Abidjan in Ivory Coast.
Nguyen Van Lang, former chair of Vinacas, who was a high ranking official of the science ministry, said: “As the father of the Vietnamese cashew processing technology, I strongly protest against the technology transfer to any country.”
Lang warned that the move will seriously affect the 1,000 cashew nut processing workshops, companies and 300,000 Vietnamese workers in the cashew industry.
Vietnam is now the biggest cashew nut exporter in the world, ranking second in processing and third in material area. The cashew exports bring $2 billion a year to Vietnam, and are one of the key export items of Vietnam, including garments, oil and gas, and rice.
Nguyen Duc Thanh, chair of Vinacas, emphasized that Vietnam would not be able to stand high among the leading cashew processors and exporters in the world if it did not have modern technology. Thanh noted that countries lust for made-in-Vietnam technology, even countries with the longest histories of cashew processing like India and Brazil.
Lang warned that exporting cashew processing technology will “bring danger”, because the technology is a great advantage for Vietnam.
Meanwhile, African countries, including Ivory Coast, the country with the largest cashew area, specializing in exporting raw cashews, will become formidable rivals of Vietnam, once they master the processing technology.
Source: vietnamnet.vn

Tanzania earns $589,000 from cashew export in one day

Tanzania has earned $638,067.85 (Sh1.08 billion) from raw cashew nut export in one day, data have established.

The data from the India-based Seair Exim Solutions Information for Business show Tanzania exported 526.26 tonnes of the raw cashew nuts to India on December 24.

The Indian ports which had received cashew nut cargo from the sailed ships from Tanzania include Vizac Sea, Mangalore and Cochin Sea.

The director general of Cashew nut Board of Tanzania, Mr Mfaume Juma, said the amount of shipped cargo to India is part of more than 170, 000 metric tonnes of raw cashew nut shipped to India this year.“We have shipped huge cargo of cashew nuts. We are now closing the season. Right now there are still farmers selling cashew nuts in various auction markets,” said Mr Juma.

He also said there were also more cargoes of cashew nuts at the ports for export to India as the Asian country is the biggest market for Tanzania’s cashew nuts.

Tanzania is in the process of mobilising millions of smallholder farmers to cultivate cashew nuts as the global demand for cashews is growing, according to report circulated by the International Trade Centre (ITC) in September 2014.

The ITC said to begin with, an agreement was signed in August this year between the government-owned Commission for Science and Technology and the Mkinga District Council in Tanga Region to revive the crop.

“The soil fertility in the area is good for cashew tree cultivation. The project provides small-scale farmers in the selected four villages, many of which are women, with technology on cashew farming under the guidance of trained extension officers and experts from Naliendele Agricultural Research Institute in Mtwara,” reads part of ITC report.

Source: http://asokoinsight.com

Merry Christmas & Happy New Year

We as DONAFOODS CO. are sending our warm wishes to your company team and families
wishing all of you a prosperous New Year 2015 with full of Health & Joy and Happiness .
We thank you for your support during past years & wishing to have your same in New Year

Best regards,

Nguyen Thai Hoc

Nguyen Trong Tri & Tran Trong Oai

Tran Mai Hong

 & All DONAFOODS ‘ Staffs