Amid a global demand slump and higher supplies, the outlook for cashew industry in 2023 is not so rosy.
Industry sources said last year was challenging with falling exports and the cashew sector expects the situation might be worse in the current year, thanks to surging raw cashew nut supply, and declining export prices on lower demand.
J. Rajmohan Pillai, chairman of Beta Group which owns the brand NutKing, told businessline that reduced spending on discretionary items such as cashew nuts has hit demand globally, making it difficult for prices to go up. Besides, the energy and food crisis have pushed up inflation globally, affecting consumer spending. The present condition is expected to continue this year as well.
Slack new orders
This is evident from the drop in the signing of new export orders which is one-tenth of the normal. Usually, at the beginning of the year, businesses signed contracts for at least until the third quarter. But this year, most importers in the US and the EU preferred not to plan for shipments until the end of the second quarter, he said.
Global production
Quoting figures, Pillai said world production of raw cashew has gone up from 2.93 million tonnes in 2014 to 3.71 million tonnes in 2022 and is expected to reach 4.41 million tonnes. The rough side of the industry is that the demand is not keeping up with the supply.
Usually, it is now the season when sales skyrocket due to the demand of yearly contracts. But both consumption and supply has taken a hit due to economic reasons. With lower demand and export prices, he said businesses are not showing any rush to import raw cashew and its prices remain high. Besides, the expected recession in the US by the end of the year has hit demand, he said.
Last year, exports of W320 grade cashew nuts fetched $2.95-3.1 per tonne and this has come down to $2.5-2.6. Raw cashew nut prices are ruling at $1,200 per tonne. Likewise, the high floor price fixed by most governments is not viable for the industry. The rise in temperature and erratic rainfall is also affecting the fruit setting process, leading to huge losses, he said.
Good crop
Pankaj N.Sampat of Samsun Traders pointed out that the cashew market has been steady at low levels for a long time. The 2023 crop seem to be good in most origins but kernel yields are reported to be lower in many origins. RCN prices also come down from the high opening levels and at reasonable levels now.
It is expected that the prices will continue to move in current range with some expectation of a small and gradual increase in the second half of 2023 provided the demand picks up. The consumption in some major importing regions (US and EU) was subdued in the second half of 2022. At the same time, the consumption in India was strong and it is expected the trend will continue in 2023, given the very reasonable prices coupled with consumer preference for healthy snacking.
Considering that prices are at 10-12 year low, prospects are that consumption in other markets will also pick up, he said.