Cashew Kernel Price Today

Cashew Kernel Price Today...

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Thứ Hai, 2 tháng 1, 2017

SAMSON'S CASHEW MARKET REPORT - 2016 REVIEW & 2017 OUTLOOK // 01 JAN 2017

01 JAN 2017




During last quarter of 2016, Cashew Market has been on a roller coaster - and that too, in a dark tunnel !!

After moving in a narrow 3.30 to 3.60 range for most of 2015 (with a brief period in May / Jun 2015 when it moved up to 3.70 - 3.80 range), cashew price started moving up gradually since beginning of 2016.

During Jan to Apr, the range was 3.50 to 3.80 which moved up to 4.00 to 4.25 in May to Jul and further to 4.25 to 4.50 in Aug to Oct.  The last quarter saw the fireworks - up from 4.50 to 5.00 (never seen before) during Oct / early Nov, down to 4.75 by end Nov and further down to 4.50 by mid Dec.  Average price for 2016 was 4.25 FOB (compared to 3.50 in 2015 and 2014 and 3.25 in 2013)

Looking at movements in 2016, we are reminded of  2008 and 2011 when we saw similar movements as follows :

2008 - 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

2011 – 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

One big difference from these parallels is that 2016 ending price is (1) higher than 2016 opening and (2) higher than 2016 average price

During 2016, RCN price also moved around quite a bit.  Starting around US$ 1500, price drifted to approx US$ 1200-1300 by March and then moved to US$ 1500-1600 during the main season. Touched a never seen before peak of US$ 2400 in Oct/Nov before coming down sharply to US$ 1900 by early Dec. Average RCN price in 2016 was approx US$ 1600  (compared toUS$  1400 in 2015 and US$ 1100 in 2014)

As we all know, it is impossible to have accurate figures of World Cashew production and consumption (especially Vietnam & India crops + India consumption).  We have collated some figures which will give an idea of the trend. Assuming no change in India & Vietnam Crops and Africa / Brazil exports of kernels, summary of Jan to Nov (2016 vs 2015) figures is as follows :

1) India Imports down from 936.50K to 672K = 264.50K = 60.5K of kernels

2) India Exports down from  97K to 70K = 27K

3) This means supply to Indian domestic market down by 33.5K

4) Vietnam Imports up from 824.50K to 1015K = 190.50K = 42K of kernels

5) Vietnam Exports up from 300K to 323.50K = 23.5K

6) This means Vietnam inventory up by 18.5K of kernels = 80K of RCN..   Inventory increase may be lower because general feeling is that Vietnam crop was smaller in 2016.

7) Export of RCN down by 74K  (India down 264.50 - Vietnam up 190.50).  Considering that inventories iN West Africa are almost NIL, this means that West Africa crop was probably smaller than 2015.

8) Supply of kernels to importing countries more or less unchanged - 397K (300 + 97) in 2015 down to 393.50K (323.50 + 70) in 2016.. This is despite the increase in average price from 3.50 to 4.25.  It is reasonable to expect that current retail prices reflect major portion of this increase (in Asia which is more than 50% of the World Market, price changes are reflected almost immediately).

After finishing the easy part (writing the 2016 review), we come to the Outlook for 2017… As we said at the beginning of this report, we seem to be in a dark tunnel (with no idea of where it ends !!)

It is our feeling that major users are well covered for first quarter, partly covered for second quarter and sparsely covered for second half of 2017.  Having seen very high prices in the last quarter, they seem to be waiting to see how prices move in first quarter before making additional purchases.

The recent decline in RCN prices from US$ 2400 (abnormally high) to US$ 1900 is not enough..  To keep the kernel price near the 2016 average of 4.25, RCN prices need to come down quite a bit more. Unless that happens, processors will be reluctant to sell below current levels, specially if they are asked to take large positions for spread shipments.

If kernel demand picks up in Jan, kernel prices will remain steady (or even go up a bit). This will mean that RCN prices at beginning of the 2017 crop will be around current levels.

If kernel demand is quiet in Jan/Feb, processors won’t be in hurry to buy when 2017 crop starts and this could mean lower RCN prices.  If processors are able to buy RCN at lower levels, they will start offering kernels at lower levels for shipment Mar onwards

Prices for SH of 2017 will probably be lower than current levels but it is difficult to say when it will happen & to what extent. If reasonable volume of kernels is traded in next few weeks for FH 2017 shipments, processors may continue to pay high prices for RCN at the beginning of 2017 crops.  If RCN prices don’t come down significantly in early 2017, extent of decline in kernel prices may be restricted  (and also it may happen later).

Considering everything, our feeling is that for most of 2017, kernel price will be in the 4.00-4.25 range with a reasonable possibility of short lived move below 4.00 at peak of the 2017 RCN season and a small chance of move to 4.50 (and maybe above) if demand is strong in first quarter.

After 3 years of 3.25 & 3.50 average and 1 year of 4.25 average,  the new “ normal “ will probably be 3.75 to 4.25 with  “ comfort “ zone around 4.00 dollars.

Pankaj N. Sampat | SAMSONS TRADERS

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