Nuts

Cashews: industry struggles with horrible demand situation

July 13, 2023 at 12:49 PM , Der AUDITOR
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HANOI/NEW DELHI. Prospects remain disastrous for cashews. Not only has international demand for cashew kernels stalled in the past months but quality is an issue and freight rates are expected to rise. Illegal shipments from Cambodia are also fuelling chaos in India.

No chance of demand reviving

Not only are red flags up in Vietnam and other export destination for raw cashew nuts (RCN) but quality issues persist in the northern hemisphere. Trouble is that the output of quality nuts has declined sharply and that high-moisture contents are a challenge. The sluggish demand witnessed in the past months also means that larger volumes are stored in warehouses, partly in challenging environments. Buyers can afford to remain on standby and watch where the market is headed as they have large supplies at their disposal.

Demand also stands no chance of recovering in summer, especially since many people are taking their holidays in July and August. Another problem is that freight rates will certainly rise, which will hardly help to improve things. Not only is China exporting more but traffic has also been restricted in the Panama Canal due to severe drought. Water levels are at their lowest here due to the weather phenomenon EL Niňo.

Production flatlines

As cashew kernel prices have slipped in-shell importers in Asia are presently renegotiating with RCN suppliers. Reports highlight that the drop in demand for cashew kernels has catastrophic economic consequences for local RCN processors and farmers, whose income has dwindled, especially in the main producing country Côte d’Ivoire. Production here is nominally up on last year at 1.25 million mt, whereas the opposite is the case in India and Cambodia. Vietnam has even reported a sharp 22% decline in production. Global production is a nominal 1% down on last year at 4.97 million mt.

Global cashew nut production (mt)

Country

2022

2023

Diff.

Côte d’Ivoire

1,235,000

1,250,000

1.2%

India

675,000

650,000

-3.7%

Cambodia

670,000

650,000

-3.0%

Vietnam

450,000

350,000

-22.2%

Nigeria

275,000

275,000

0%

Guinea-Bissau

260,000

260,000

0%

Ghana

200,000

235,000

17.5%

Benin

240,000

230,000

-4.2%

Tanzania

200,000

200,000

0%

Burkina Faso

130,000

150,000

15.4%

Guinea-Conakry

120,000

140,000

16.7%

Brazil

147,200

115,000

-21.9%

Indonesia

100,000

100,000

0%

Senegal

85,000

100,000

17.6%

Togo

60,000

90,000

50.0%

Mozambique

85,000

85,000

0%

Gambia

28,000

28,000

0%

Mali

7,000

7,000

0%

Kenya

5,000

5,000

0%

Others

55,000

55,000

0%

Total

5,027,200

4,975,000

-1.0%

INC May 2023

India and Cambodia suffer drawback from low prices

Lives have turned miserable for many daily wagers and farmers in India’s Palasa region in Andrah Pradesh as processing units and traders started a 25-day strike in July. Farmers are unable to sell their cashews and thousands of daily workers are not being paid. The shutdown is mainly driven by plummeting prices, a bumper crop and cheap often illegal imports from Vietnam, Cambodia and other countries. Yet, it should be noticed that Cambodia is not really reaping many benefits from these channels. Unauthorised exports have, in fact, put a dent on the country's official export figures. While the Ministry of Agriculture, Forestry and Fisheries reports a 12.7% rise in cashew nut exports to 360,000 mt for January-June as compared with the same period last year, spokespersons also highlight that a slump was witnessed in the first quarter driven by uncertainty, climate change and illegal shipments to Vietnam and Thailand.

According to the Cashew nut Association of Cambodia (CAC) cashew exports contributed more than USD 1 billion to the national economy and are second only to rice. Despite its importance the entire industry is, however, struggling to make ends meet. Financial obligations, for instance, force many farmers to sell immediately rather than wait until prices peak in August-October. Farmers have eliminated an estimated 100,000 ha of cashews in the past two years and the industry is calling for local investments. Prices have slipped in India in recent months but have remained stable this week.

Cashew nuts, India

Type

USD/mt

LWP

6,435

SWP

5,770

W320

7,780

W450

7,056

FOB India

 

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