CASHEW MARKET UPDATE FIRST HALF OCTOBER

1. Kernel Market: Weak Demand and Growing in Caution

The kernel market showed less positive in early October, as buying demand from major markets remained too weak to support trading activity. In China, buying activity after the National Day holiday remained slow, with only small volumes being traded and no clear signs of recovery.

Meanwhile, political tensions in the Middle East continue to rise, along with protests and social unrest in some European countries, especially France and Italy, raising concerns about the global economic outlook in the coming period. These factors may negatively affect buying demand, importers' purchasing decisions and stock planning in Western markets.

Regarding local market, there have been no significant changes compared to the previous period. RCN prices remain consistently high, while kernel prices have not improved accordingly, putting strong pressure on processing profit margins. Many small local processors have started considering or have already decided to stop production earlier than planned. As a result, cashew shell supply continues to face upward price pressure, as fewer processing factories remain in operation.

For kernel prices, as for big-nut grades, especially W240 and W180, continue to attract the most buying interest. Kernel prices have increased slightly by around 10 cent/kg compared to September, with W320 traded at around $6.90/kg and W240 at $7.70/kg.

However, rising ocean freight costs and ongoing instability in Europe are directly affecting buyers' decision. Some buyers have temporarily stopped purchasing or delay shipment schedules for existing contracts, making the recovery of the export market even more challenging.

One of the main concerns in the current market is the growing stock of W320 at Vietnamese factories, as buying demand is now more focused on W240. Export prices for W320 to the EU and US markets are ranging from $3.05–3.10/lb, while W240 is traded at around $3.50–3.55/lb. W240 supply remains relatively limited, leading to a widening price gap between the two grades.

2. RCN Market: East Africa Offer Remain Above Acceptable Levels for Vietnamese Processors

High RCN prices have continued to be a major challenge to trading activity throughout this recent period. Offers from West Africa have started to slow down, while some first auctions in Tanzania have consistently seen high prices. Buyers and Sellers have not been able to reach an agreement, leading to repeated cancellations of these auctions

The initial offer price from Tanzania at around $2000/MT is considered too high for Vietnamese processors to accept under current market conditions. Mozambique RCN is also being offered at relatively high prices, ranging from $1600–1650/MT for Outturn 47–48 lbs. Meanwhile, Indonesia RCN supply remains limited, with OT 51 lbs trading at around $1720–1740/MT.

From Vietnamese processors viewpoint, acceptable price levels to consider starting purchases are currently below $1800 – 1850/MT for Tanzania RCN with OT 52 lbs and below $1550/MT for Mozambique RCN with OT 47 lbs. However, the gap between Sellers' offer prices and Buyers' expected prices has not narrowed significantly.

During situation of unstable kernel export prices, Vietnamese processors are likely to continue remain cautious rather than following the high offer prices for East Africa RCN. The risk to processing profit margins is a particularly important concern, especially after a rather unfavorable West African crop season since the beginning of the year.

At current RCN price levels, purchasing at high prices means putting greater pressure on processing profitability and the ability to sell kernels. Therefore, any adjustment in offer prices from Sellers will play an important role in helping trading activity improve in the coming period.

3. Quarter 4 Outlook: Growing Financial Pressure and Stock Risks

Vietnam enters Quarter 4 with not much positive news from both domestic and international markets. Kernel demand has not shown clear signs of recovery, while RCN prices remain high, along with rising freight costs and continued shipment delays are putting further pressure on factories’s cash flow.

Besides market difficulties, the year-end period is also a time when factories need to focus on handling their financial obligations, especially bank loans with high interest rates. This puts greater pressure on working capital and raises more concerns about their ability to maintain production, particularly for factories with large stock or low profit margins.

In this current market conditions, focusing on stock control, cash flow management and careful purchasing decisions could be a suitable strategy for Vietnamese processors. The market still needs more time to reach a reasonable price balance between RCN costs and kernel selling prices before a stronger recovery in trading activity can be expected during the remainder of Quarter 4.

Reference prices

Kernel Offers from Packers

• W320: $3.15-3.2 – top and BRC packers
• W320: $3.05-3.15 – medium packers
• W240: $3.5–3.6
• W180: $4.5-4.6
• WS: $2.55-2.6
• LP: $1.85-1.95

Raw cashew nut offers

• IVC 45 lbs – 185 NC – 1530$ - afloat
• IVC 44 lbs – 185 NC – 1490$ - afloat
• Tanza 52 lbs – 190 NC – 2000$ - Nov/Dec
• Indonesia 51 lbs – 200 NC – 1750$ - Oct Nov
• Mozambique 47 lbs 1650$ - Nov/Dec

Borma Offers

• 2.48-2.5$/lbs – Oct Nov

Homie D'Lion Group