Nuts

Cashews: farmers in a fix

February 1, 2023 at 9:10 AM , Der AUDITOR
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HANOI. Farmers presently have little incentive to harvest cashews in Vietnam. Many have, in fact, stopped harvesting as local media report. Trouble is that raw material prices are simply too low. There is no chance of improvement as prospects are bleak for exports.

Miserable prices

According to VINACAS, the Vietnam Cashew Association, the country exports 90-95% of its production, whereas only 5-10% are consumed domestically. As many countries have cut spending on non-essential goods, including cashews, exports have slumped with little chance of revival this year. Now the farmers, who are normally busy harvesting at the start of the year, are in a fix. Raw nut prices have declined sharply, despite output being low. They presently range at VND 21,000-25,000/kg as opposed to VND 35,000/kg and more last year. Traders refuse to buy and retail demand is slow to revive after the Tet holidays leaving most farmers with no other option but to stop harvesting.

Everything hinges on exports. Although the market already experienced a sharp dent in 2022, things are set to get worse in 2023. While businesses normally sign contracts reaching well into the third quarter in January, most buyers in the USA and Europe do not intend to purchase cashews until the end of the second quarter. As local suppliers report the number of signed contracts has dropped by 90%.

Exports miss target

The statistics issued by the General Department of Customs show that Vietnam clearly failed its export targets in 2022. Although the initial target of USD 3.8 billion was cut to USD 3.1 billion, exports only reached USD 3.08 billion, which is 15% down on 2021. The export volume also declined by 10% to 519,782 mt. While sharp declines were witnessed in shipments to America, China and Europe, demand increased notably in the United Arab Emirates, Saudi Arabia and Israel.

Multiple crises hit the market in 2022 and will continue to make things difficult for Vietnam in 2023. With the war in Ukraine approaching its first anniversary, the energy and food crisis still lingering and inflation being a serious issue throughout the globe spending on no essential goods such as cashews will certainly remain low and supply chains disrupted. Processing costs have also risen and import prices for raw cashew nuts are still too high for the likings of Vietnam’s cashew industry, which adds further uncertainty for suppliers. Citing these reasons VINACAS has set a modest but still rather optimistic export target of USD 3.1 billion for 2023 and intends to step up promotion.

Cashew nut exports, Vietnam, 2022

Destination

mt

USD

Diff. on 2021
mt

Diff. on 2021
USD

USA

143,649

842,715

-18.5%

-19.9%

China

75,501

440,645

-11.0%

-28.0%

Netherlands

53,368

296,511

-22.5%

-20.6%

Germany

17,353

106,044

-18.2%

-21.3%

Australia

15,948

94,916

-5.7%

-10.0%

UK

15,439

86,554

-4.7%

-8.4%

Canada

12,340

76,288

-29.1%

-31.7%

UAE

10,878

65,622

42.8%

35.4%

Saudi Arabia

8,827

55,037

44.9%

33.7%

Israel

8,473

59,750

10.4%

3.2%

Others

158,006

962,586

1.1%

-4.2%

Total

519,782

3,086,668

-10.3%

-15.1%

General Department of Customs, Vietnam, Jan-Dec 2022

The battle is on

Despite losing valuable market shares in the United States and China, Vietnam will continue to target these countries in 2023. Judging by the figures released by the United States International Trade Commission, total imports declined by around 18% in terms of volume and by 19% in terms of value in January through to November 2022 as compared with the same period in 2021. As the US imported 121,950 mt of cashew nuts worth USD 768 million between January and November 2022 from Vietnam, the country's market share has nominally declined. While Vietnam still held a market share of 89.32% in the eleven-month period in 2021, this dropped to 89% in 2022. Imports from Ivory Coast and Nigeria, by contrast, rose sharply by 49.9% and 45.8% in terms of volume and by 42.6% and 66.7% in terms of value.

Vietnam is also losing out against its competitors in China. Contrary to Vietnam’s General Department of Customs, which states that shipments to China declined by 29% in terms of value in between January to November 2022 as compared with the same period in 2021, Chinese Customs indicate that imports from Vietnam rose by 38.2% to USD 215 million. According to Chinese customs Vietnam may hold a market share of 88% but the import value from Togo, Myanmar and Ivory Coast rose sharply by 110%, 345% and 116% respectively. China’s total imports increased by 39% to USD 243 million in January to November 2022 as compared with the same period in 2021, despite the country’s strict zero-Covid policy. As this policy has now been abolished reports are circulating that China is now aggressively buying fruits, nuts and other products from Vietnam, which may be a glimmer of hope for the cashew industry.

Firm prices in India

The market in India is surprisingly strong considering the challenges the export market is facing. Prices, in fact, rose in the second week in January but have remained firm ever since.

Cashew nuts, India

Type

USD/mt

LWP

6,790

SWP

6,125

W450

7,420

W320

8,135

W240

8.785

FOB India

 

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