Cashew market dull on lack of buying .

The cashew market during the week remained quiet with very limited activities and consequently the prices also by and large remained unchanged.

W240 was at around $3.15-3.20, W320 around $2.90-2.95, W450 around $2.75-2.80, Splits/Butts around $2.50(f.o.b). “Europe continued to be quiet but some sales were made to the US and other markets,” trade sources said. “Except for some brisk activity in the second half of April, market has been quiet for more than two months which is a cause for concern as it adds to the potential for volatility,” Mr Pankaj N. Sampat, a Mumbai-based dealer told Business Line.

Despite the lack of activity, there have been no signs of any large selling pressure except for some processors who have been offering recently at slightly lower levels to move some stock, he said. Main reasons for this are high prices paid for Raw Cashew Nuts (RCN) and slow arrivals of RCN leading to reduced processing. “It is to be seen whether processors can hold on till some large buying interest comes in. Since there is very little replacement of RCN to be bought, they will probably keep selling small volumes at regular intervals”, he said.

On the buying side also, there is no rush to buy as there is uncertainty of market trend, mainly caused by external factors rather than fundamentals of demand and supply. “People who are short are short at lower levels and they are content to pick up some volume when they see a dip in prices and until fresh demand comes in, they will wait till the last moment to cover short positions,” he said. Nobody seems to be in a mood to take on large positions due to uncertainty of off take in second half 2010 and contracting for 2011.

Recent developments in financial markets is adding to the concern about impact on retail sentiment and ability to carry inventory/forward positions, Mr Sampat said.

Sluggishness prevailed in the RCN market also. Very little quantities were available in origin. “We expect major volume from all origins to be shipped out by the end of June. In coming weeks, we may see some activity in the RCN re-sale market depending on kernel market activity. Currently prices for afloat parcels are around $900-925 a tonne for Ivory Coast (IVC) and around $1,100 a tonne for Guinea Bissau. Lower quality parcels in origin are offered at slightly lower prices,” traders said. August onwards are peak consumption months in most markets, especially the Asian market which is predominantly a spot market. No fresh RCN will be available between July and October. These two factors should provide a floor to the market in the top half of the current range “unless something dramatic happens – either a big drop usage in May-August leading to less need to buy or a worsening of the economic situation leading to reduced contracting,” they claimed.

Source : Business Line