Cashew Prices Rise On Low Global Production.

Cashew prices are moving up globally due to less inventory and lower production in some producing nations.

The market is expected to remain firm in the near to medium term due to low supplies, traders said. Prices are likely to remain firm until the supply situation changes or there is a clear indication of a large decline in demand, they added.

The current prices are about 50% higher than the average of last 18 months and the highest ever seen, Pankaj N Sampat of Mumbai-based Samsons Trading Co said.

Lower than expected production in Indonesia, delayed arrivals in Brazil and low inventories in importing countries will result in a tight kernel supply position in first quarter 2011, he said.

"Although it is difficult to say whether prices will continue to move up in coming weeks, we can certainly expect a firm market until there is some indication of the crop prospects next year. If the crop in 2011 is normal, market may soften after April," he said. If there is any problem with 2011 crops, coupled with low inventories from this year, then prices could continue to move up unless there is a big drop in usage, he added.

Reports indicate that domestic cashew supply in 2010-11 would be down by 30% due to climatic factors.

India's cashew production is estimated to be around 6.3 lakh tonne in 2009-10 as against 6.95 lakh tonne in 2008-09.

In 2007-08, the country produced around 6.65 lakh tonne of cashew. India has to import more than half of its requirement of raw cashew because of low domestic output. Late rains are reported to have damaged some crops in West Africa adding to the firmness in the market.

Indian exports during the first part of 2010-11 financial year have remained unchanged as compared to last year due to constrained buying from developed markets.

The country's cashew kernel exports during April-July period have shown a marginal rise of 2.1 % to Rs 713 crore compared to Rs 698 crore in the same period a year ago.

Interestingly, import of raw cashew has also come down in the current financial year, which also indicates lower demand at both domestic and export market.

Unlike 2009-10, when imports were increasing despite low exports, import of raw cashews has gone down by more than 14% during the first two months of 2010-2011 while the total value of imports has come down by 8%.

Source : news.in.msn.com