The coronavirus outbreak in China may not have directly impacted the domestic cashew current market in India. Having said that, its impact on Vietnam’s cashew trade is a stressing component for cashew companies in India.
Though the prices of raw cashew nuts (RCNs) are coming down in the world wide current market, the large inventory of RCNs that Indian companies acquired at greater prices is a bring about for worry.
Highlighting the impact of corona outbreak on Vietnam’s cashew sector, K Prakash Rao, Chairman of the Mangaluru chapter of the Confederation of Indian Industry (CII) and a cashew manufacturer, advised BusinessLine that 20-22 per cent of the Vietnamese cashews were being eaten in China in advance of the outbreak of coronavirus. This experienced assisted Vietnam realise very good price from the Chinese current market.
Having said that, subsequent outbreak of coronavirus in China, Vietnam is now not in a position to promote cashew there, and is stranded with large unsold cargoes.
Referring to the earlier mentioned situation, Walter D’Souza, previous Chairman of the Cashew Export Promotion Council of India (CEPCI) and a cashew manufacturer from Mangaluru, advised BusinessLine that Vietnam experienced to uncover an alternate current market instantly. As a consequence, it was compelled to provide down the prices of cashew kernels in marketplaces this sort of as the US and Europe.
Stating that Vietnam is the important competitor for India in the worldwide kernel current market, Rao explained the two India and Vietnam have large processing capacities. In actuality, the two these place with each other import all around ten lakh tonnes of RCNs from nations in East and West Africa.
Though Vietnam largely caters to the world wide current market, Indian cashew kernels are typically eaten in the domestic current market, which is expanding by 7-eight per cent 12 months-on-12 months.
He explained Vietnam is now articles assembly its prerequisite of RCNs from its own output and from Cambodia. The prices of RCNs in these current market have dropped to $1,200 a tonne from $1,500 a tonne to compensate for the fall in the prices of kernels.
He explained the reduction of Vietnam’s processing potential subsequent the coronavirus outbreak in China has led to its absence from most of the West African-origin RCN marketplaces this sort of as Ivory Coast, Benin, Nigeria and Ghana.
Stating that India depends on East African crop ― specially from Tanzania ― from September to March every 12 months, Rao explained most processors in India acquired Tanzanian RCNs at all around $1,650 a tonne, and acquired very good quantities of the Ghana crop at $1,550 a tonne. These shares are now remaining delivered to reach Indian shores in March.
He explained the absence of Vietnamese purchasing has suddenly led to the drop in prices of RCNs by $200-250 a tonne. This has caught absolutely everyone unawares in this article.
Stating that the sentiment is extremely reduced amid cashew companies in Karnataka, Subraya Pai, president of the Karnataka Cashew Manufacturers’ Association, advised BusinessLine that processors in the point out have imported large quantities of RCNs from Tanzania, and also put orders for shipments from Ghana.
D’Souza explained most of the Indian cashew kernels from East African RCNs would have absent into the worldwide current market in the usual course. With Vietnam bringing down prices, there is now much larger disparity in the worldwide current market. As a consequence, these shares may not be exported from India.
Terming the domestic current market as a ‘discounted just-in-time market’, he explained if someone wishes to obtain, say, ten tonnes of cashew kernel, he would obtain a few tonnes and get it replenished when necessary. He explained the cashew kernel inventory in India is at a around-all-time higher at this level in time.
Carry-about inventory of cashew kernels is making some amount of tension on the procurement of RCNs, or the liquidation of kernels by itself, he explained.
Prakash Rao explained that while reduced prices of RCNs augur well for the marketplace, the destructive sentiments on the finished products current market will gradual down usage initially in anticipation of a fall in kernel prices.
Stating that the confusion in the current market may gradual down this sector, he explained: “We hope it will settle down before long, the outbreak contained in the coming months and usage in the domestic current market picks up owing to reduced prices.”