CASHEW MARKET UPDATE FIRST HALF AUGUST

The kernel market is still going through a freeze period that has continued since the July trading session and there are even more negative reports that EU- USD and Middle East Buyers delaying shipments for August–September period. While W320 and W240 are still being traded at a steady level, the lower-grade market as broken, 2nd grade, and SK, remains slow with unsold stocks which continues to affect to overall value of the supply chain, as the Middle East and China markets have not shown any positive signs throughout the summer time as usual.

Kernel prices remained largely unchanged during this period and market pressure even increased when Olam temporarily stopped purchasing W320/W240 from last three weeks. While some major Buyers such as Red River and Richards even delayed W320 shipment, making market liquidity more difficult and causing further congestion. The fact of increase in ocean freight, along with the difficulty in securing bookings to the Middle East, have also increased pressure on factories as more kernel stocks remain in their warehouses. While although RCN arrivals at the ports have not been too much pressure, liquidity remains low and thus some factories have even had to cut losses by selling into the local market to reduce the current output. The lack of buying activity from the Middle East Buyers continues to put pressure on 2nd grade and broken kernels, along with China Buyers have yet to return to the market, making local trading activity even quieter. After some local factories temporarily stopped production, shell prices increased slightly, encouraging some factories to return to process and look for cargo at Bonded Warehouses. Meanwhile, some US Buyers such as Ultra and Atlantix have also came back to cover for some purchases, although at lower price levels - which is still a positive sign for the market and gives some hope for improved activity toward the end of August and early September.

RCN trading remains limited, with prices declining slightly but not significantly. The market is mainly focused on IVC 45–46 lbs afloat cargoes, IVC 46 lbs is being offered and traded at around $1470–1475/mt, while 44 lbs is being sold at around $1425/mt. The Indian market appears to be more active during this period as factories are preparing materials for production ahead of the Diwali festival in late October and early November, which could be one of the reasons there are fewer RCN offers from India back to Vietnam, or explain why RCN prices have not fallen too deeply for the shipments that are about to arrive. Some Buyers are even looking for RCN shipments arriving in October–November to maintain production, instead of relying on higher-priced origins such as Bissau, Indonesia, or Tanzania in the last quarter of the year.

The market remains slow when facing difficulties to find a balance between RCN and Kernel prices for output in Viet Nam. Meanwhile, some Borma trading have taken place at around $2.40–2.45/lb, showing that although it is a new item, still gradually attracting some interest from factories. Until the market sees a real return of demand from EU and US Buyers, Vietnamese factories are only trying to maintain operations at low capacity, some major factories have even decided to stop production and keep RCN in their warehouses, waiting for better opportunities in the final quater of the year. Although it is risky to wait for the market to recover, it seems to be a temporary strategy to avoid further losses, rather than selling off kernel stocks at the current low values when there are still too many unresolved challenges in the market.

Reference prices

Kernel Offers from Packers

• W320: $3.10-3.15 – Top and BRC Packers
• W320: $3.05-3.10 – Medium Packers
• W240: $3.4–3.5
• W180: $4.3-4.4
• WS: $2.57-2.60
• LP: $1.95-2.0

Raw cashew nut offers

• IVC 43 lbs – 190 NC – $1400 – Aug Sep
• IVC 44 lbs – 190 NC – $1430 – Aug Sep
• IVC 45 lbs – 190 NC – $1460-1480 - Aug Sep
• IVC 46 lbs – 190 NC – $1500 - Aug
• Nige 44 lbs – 180 NC – $1380 - afloat
• Ghana 47 lbs – 190 NC – $1540 - afloat
• Senegal 53 lbs – 225 NC – $1640 – afloat

Borma Offers

• Borma IVC: 2.42-2.45$/lbs – August/Sep

Homie D'Lion Group