For most of 2020, Cashew Kernel prices have been moving sideways - except for the big drop in Mar/April 2020 and a short lived dip in August/September 2020. The main traded grade - W320 has been in the range of 2.80-3.10 FOB Vietnam and 3.30-3.60 FOB India for most of SH 2020.
A notable feature has been that there has been a wider than normal gap between the lowest and highest prices on any given day (even from the same origin for same shipment period and that business has been done at both ends of the range.
Even today, price differential continues to be large – currently, the price range for W320 is 2.90-3.10 FOB Vietnam and 3.45-3.60 FOB India.
RCN prices touched their lows in April/May - a drop of almost 50 per cent from January/February 2020. There has been a recovery of 30-35 per cent in the last few months.
Of course, Covid and its impact on economies everywhere did affect the Cashew Sector in many ways – movement of RCN, reduced processing in India, etc.
There was a significant decline in consumption in India during 2020-Q2 and Q3 – mainly due to impact of lockdown and other restrictions on the HORECA segment. There are signs that things are recovering and we can expect a good increase in usage in 2021.
In all other markets there has been reasonable growth in consumption during 2020. This can be expected to continue in 2021 due to the lower prices (the lowest in 11-12 years), consistent supply and the general popularity of natural and healthy foods.
Slow movement of broken grades has been a challenge for all origins – aggravated by the decline in consumption of these grades in catering and traditional sweets segment in India.
During the Tanzania auctions, prices have been surprisingly very steady at the higher than expected levels despite not much activity in the kernel market.
Current kernel prices are the lowest in 10-11 years (Vietnam) and 5-6 years (India) - and current RCN prices are the lowest in 4-5 years. Downside is limited. It is quite possible that we will see a gradual and small increase in 2021.
Current RCN prices (US$ 1400-1500) are about a third higher than lows reached in April/May. They may come down during the peak of 2021 harvest (provided all crops are good) but it is unlikely they will come down to the 2020 lows.
Looking forward, our feeling is that prices will be steady to slightly firm until February/March as RCN availability is limited. After that, movement will depend mainly on off take in November/ December which will determine trend of kernel activity in January/ February which in turn will affect the RCN demand and prices in beginning of 2021 crop.
Overall we expect that market will be steady for FH of 2021 with possibility of some increase if kernel market is active in January/February. Downside it limited - it is unlikely that in the near future, we will again see the very low prices that we saw Q2 of 2020.