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Not having written a report since May 2022 (as there was nothing much to write about), end of the year seems to be a good time to share some observations (and thoughts).

During these 18-20 months, Cashew W320 has been moving in the 2.50-3.00 range (depending on origin and quality).

Due to economic uncertainty and high inflation in mid & SH of 2022, consumption came down in EU & US. Over supply by end of 2022 coupled with good 2023 crops meant that Cashew prices came down and remained soft during 2023.

In Q2/Q3 of 2023, W320 dropped below 2.50 FOB Vietnam from small and medium processors but has held above 2.50 FOB Vietnam from the larger & better quality processors. Although market has been quiet for last few weeks, current range of offers is 2.45 to 2.60 FOB with very few offers at the lower end of the range.

From Africa, prices are 10-20 cents higher. Despite this, Africa share of US & EU market is increasing because of (1) better & consistent quality due to 1 origin RCN (2) processing in origin reduces risks of quality deterioration (3) more large & modern processing facilities with strong process control and (4) traceability & sustainability story.

By middle of 2023, it became evident that economic situation was not as bad as feared. Consumption picked up. Inventories started getting used up. This is reflected in the higher imports by USA & EU during the last few months.

There has been strong growth in consumption in Asia (India, China, Middle East) because (1) price change is reflected very quickly in retail prices in these markets and (2) India + many other Asian countries are doing well in general.

One interesting (and unusual) feature of the Cashew market in 2023 – During the Southern Hemisphere harvest in Q-4, the RCN market was quiet and soft (compared to previous years).

Looking at broad picture for 2024 :

1) Russia-Ukraine situation continues to simmer but the worst seems to be over.  Some concern about how Middle East situation will evolve. Things will remain tense but I think multi-lateral self-interest will prevent things from escalating too much.

2) Barring a Black Swan event, it seems that economic situation will improve in coming months – policy indications from USA & other major economies certainly point in that direction.

Coming to 2024 prospects for Cashew :

1) Current price range was last seen in 2009. Like everything else, RCN prices & kernel prices have fluctuated based on various factors (demand, supply, economy) and this will continue.  But all other (non-RCN) costs have gone only 1 way – UP – in these 15 years.

2) Cashew supply has been comfortable for the last few years. Built-up over-supply is almost completely used up. Inventories seem to be at normal working levels.

3) There is not much chance of any big increase in supply in short term.  On the contrary, there is some concern about what impact El Niño will have on 2024 crop (especially in Vietnam & Cambodia).

4) Shipments of Tanzania crop have been very slow this year due to logistic challenges. This means that bulk of the crop will arrive in India and Vietnam in Q1-2024 (may spill over into Q-2 if challenges continue).  This MIGHT dampen demand for early shipments of 2024 crop unless there is some adverse development due to El Nino.

5) Processing in West Africa is slated to keep increasing with several new factories coming up in 2024 and 2025. If Tanzania gets its act together, we could see some investments there also. Plus, there is talk about processing in Cambodia. All this could mean positive development for the Cashew sector –diversification of supply, better quality, increased consumer acceptance.

6) During 2024, there is a reasonable possibility of increase in consumption due to the lower prices & better availability coupled with good probability of economic growth in most countries.

Overall, we can expect market to be steady. Downside is very limited. Unless something dramatic happens on supply side, there will not be any big jump in prices but I have a strong feeling that prices in 2024 will be somewhat higher than the lows we have seen in Q-2/Q-3 of 2023.

BEST WISHES TO YOU AND YOURS FOR THE HOLIDAY SEASON …. And for a HEALTHY, SUCCESSFUL & JOYFUL 2024 !!!

Posted on  by pankajnsampat