The Hindu Business Line : Cashew market seen in balance

THE big oversupply in cashew kernels leading to lower prices seen over last two years is expected to be diluted as supplies turn more comfortable in 2003 and a semblance of balance returns to cashew demand and supply situation. However, a fine balance has the potential to impact the market as even a small change in demand or supply can be upsetting and prices can react.

Commenting on the cashew market prospects in 2003, Mr Pankaj Sampat of Samsons Trading Co, a well-known trade intermediary, said: ``While demand is approximately 10.50-10.75 million cartons, availability will be around 11.25-11.50 million cartons, leaving a small surplus of 7 per cent. A small change in supply or demand can upset this equation''.

Kernel prices have been below $2 per pound for more than two years, having ruled at $1.80-1.90 per pound for most part and currently slightly lower in the range of $1.70-1.80 per pound. Due to lower prices the holding capacity at all stages in the chain has improved.

Ironically, despite low prices, roasters, packers and dealers have not been buying big quantities or building inventory primarily because of the assured supply situation and ready availability. ``Once players start to build inventory or cover big volumes for forward positions, prices will start moving up,'' Mr Sampat pointed out.

In the near-term, that is in the first quarter of 2003, Indian processing is likely to be low due to limited arrivals of raw cashew from East Africa.

Over 75 per cent of the world production will be harvested in the second quarter of next year in India, Vietnam and West Africa. While weather conditions have so far been satisfactory, the next 6-8 weeks will give an idea of crop prospects in these origins, according to Mr Sampat.

During January-September this year, India's raw cashew imports registered three lakh tonnes. For the whole year, such imports are projected to cross 3.75 lakh tonnes.

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