India may benefit from falling prices of raw cashew
Kochi: India may stand to benefit from the crash in the raw cashew prices globally as Covid-19 hits consumption in China.
India currently meets over 60 per cent of its cashew processing requirement through import of raw cashew, mostly from African countries. The consumption slump in China has led to a supply glut pushing the prices down.
In the long run, India is likely to process and consume more, according to K Prakash Rao, MD of Kalbavi Cashews. India is the largest consumer of cashew nut. But he did not share the same level of optimism in the case of export.
“Vietnam, the largest exporter of cashew, mostly exports low grades and brokens to China, has gone slow on raw cashew procurement. As a result, the raw cashew prices have slid by $200-250 per tonne to $1,300 per tonne,” he said.
The harvest season has just begun in the West African countries, and will continue for next few months.
Vietnam has been dominating the global cashew arena as the country is able to sell cheaply by keeping the cost down through mechanised processing. Besides, the country has virtually no domestic consumption. Cheaper raw cashew will help Indian cashew processors and exporters to procure more quantity but a possible fall in cashew kernel prices will be area of concern. “Vietnam’s absence has put pressure on the prices. It may pull down the kernel prices too in its wake,” Rao said. He expects the cashew kernel prices to drop by 25 to 30 cents to $3.15 to 3.30 per pound.
India’s cashew export, which went above 1 lakh tonnes, have declined in the past few years with intense competition from Vietnam. The exports stood at 66,693 tonnes last year. Slowdown in Chinese demand has also created a confusion in the cashew importing countries. “Usually, the exporters plan shipments during January. The price crash has affected the plans to an extent,” said Hari Krishnan R Nair, MD of Western India Cashew.
“We fear the negative sentiment may affect the industry as traders could reduce offtake and go slow on servicing. It may take another three months for things to settle down,” Rao added.
Nair pointed out that high raw nut prices had forced many exporters especially in Kerala out of business in 2018. They couldn’t take advantage of price drop last year. “But exporters in Mangaluru and other places could do well.”