Rising global consumption is likely to pep up the cashew nut market in the second half of the year. The market fell sharply in the first half due to the high price of nuts and continuing economic problems.
Traders expect modest recovery in consumption from the US, Indian and Chinese markets in the second half. India is the world’s largest consumer of cashew nuts with trade estimates of consumption ranging from 170,000-190,000 tonne. It is also one of the largest processors and exporters of kernels.
?The demand side will drive the market in the coming weeks. With fairly stable prices in a narrow range for a reasonably long period, it is safe to expect improvement in consumption in most markets. There are signs of interest from some buyers for slightly longer spreads,? said Pankaj Sampat of Mumbai-based Samsons Trading.
?This is the time when inventories are built for the peak consumption period. In the third quarter, the US and the EU will also be covering unfilled positions for 2013 and some portion of requirements for first half of 2014,? he added.
?US buying is seen improving and demand from Iran is also looking up. Indian demand is a major factor in the second half with lot of festivals like Diwali, which lead to higher consumption of such items. The market is expected to be brighter in the second half,?
Pratap Nair of Vijayalakshmi Cashews, one of the oldest and largest cashew-exporting houses, said. Pankaj feels that the market may rally to new heights if demand from Asia, US and Europe kick in together. Indian exports are expected to be more competitive due to the weakening of the rupee.
Supply has also been tight with production reported to be lower in Vietnam and Brazil. Global cashew supply during the current FY is likely to be lower by 5% due to erratic weather in most of the origins, says a report of the International Nut & Dried Fruit Council (INC).
INC estimates the kernel supply in 2012-13 to be around 5,28,572 tonne against 5,56,668 tonne in 2011-12.Indian supply is estimated to drop to 1,35,000 tonne from 1,50,000 tonne in the last fiscal, while supply from Ivory Coast is estimated to drop to 85,000 tonne from around 98,000 tonne, says the report.