Bearish market for cashew nuts, but processing could double in Africa
The cashew market is buzzing at the moment, especially at the world's largest producer and exporter, Côte d'Ivoire. Several press articles report low prices, lower quality, queues of trucks in ports, etc. Explanations of Pierre Ricau, Agro Markets Analyst of N'Kalô Service, collected by CommodAfrica.
The demand is calm and the abundant supply of raw cashew nuts
The quality is a little worse in Côte d'Ivoire and Ghana, partly because of the heavy rains that fell in these two countries in March-April, but especially if the demand is correct, it is calm.
Why ? Essentially because India and Vietnam had good harvests locally and they started the 2018 campaign with high residual stocks from the previous season. Pierre Ricau estimates them at least 200,000 tons. Importers are therefore quiet and gradually the balance leans against the producers. After three bullish seasons, producers started the 2018 campaign with a very speculative attitude. " Many producers have stored most of their crop and now for two to three weeks they are all starting to be scared and looking to sell. This lowers local prices because there are more sellers than buyers ".
A difficult situation specific to Côte d'Ivoire
In Côte d'Ivoire, the situation has become more complex with the implementation of an incentive policy to develop processing. "This year, Côte d'Ivoire has increased the export tax on raw nuts and at the same time has put in place a procedure whereby an exporter is obliged to make an offer to sell to processors before exporting. Normally, exporters must reserve 15% of volumes exported to processors. So when they want to export for example 1000 tons, they have to auction 150 tons for the processors. There is some delay for the answer. All this hinders the exports of Côte d'Ivoire enormously because the procedure is longer than the tax. In a bearish campaign, the decline has doubled in Côte d'Ivoire"Pierre Ricau points out. Two weeks ago, buyers were still paying the minimum price, FCFA 500 per kilo, today the price is between FCFA 350 - FCFA 400 per kilo. " These are good prices for cashew but they are much lower than what producers used to receive in the last three years ."
The situation is not the same in the other countries of the sub-region even if in all countries prices have fallen compared to the previous season. In Burkina Faso and Nigeria, prices are falling but the fall is not sudden and producers have managed to sell the majority of their production before the decline. In addition, in Nigeria, the price today is around CFAF 600 per kilo.
In Guinea Bissau, there are big problems, the government has set a very high minimum price - FCFA 1000 - and some policies, including the Minister of Agriculture, encourage producers not to sell below the minimum price. At the moment, the purchases are made to FCFA 700 for the good quality but that will not remain because the supply is abundant.
In the Gambia and Senegal, prices are starting to fall but remain high, around FCFA 600, FCFA 700 or FCFA 800 per kilo. However, says Pierre Ricau, it is possible that in two to three weeks, prices fall below FCFA 500 everywhere due to the abundance of cashews. What is certain is that the campaign will be very spread with exports until September.
The transformation could be winning
The situation is favorable for processing with lower prices and abundant supply. Pierre Ricau estimates that cashew processing in Africa could double this year. But not all processors are in the same boat. For those who can afford the nut, they are already covered 60 to 70% of their needs. There are about ten companies in Côte d'Ivoire, two in Benin, four in Burkina Faso and two in Ghana. " The factories that in each country had shown that they were successful but could not refuel will do it this year, " says the analyst.
Demand for cashew kernel remains vibrant
In the first quarter of 2018, demand for cashew kernels remains very dynamic in the main consumer markets in Europe and the United States, with a 13.6% increase in imports to 57,802 tonnes. The increase is particularly noticeable in Europe with 29,023 tonnes imported, or nearly 25% more than the first quarter of 2017, according to statistics provided by N'Kalô.
The demand is calm and the abundant supply of raw cashew nuts
The quality is a little worse in Côte d'Ivoire and Ghana, partly because of the heavy rains that fell in these two countries in March-April, but especially if the demand is correct, it is calm.
Why ? Essentially because India and Vietnam had good harvests locally and they started the 2018 campaign with high residual stocks from the previous season. Pierre Ricau estimates them at least 200,000 tons. Importers are therefore quiet and gradually the balance leans against the producers. After three bullish seasons, producers started the 2018 campaign with a very speculative attitude. " Many producers have stored most of their crop and now for two to three weeks they are all starting to be scared and looking to sell. This lowers local prices because there are more sellers than buyers ".
A difficult situation specific to Côte d'Ivoire
In Côte d'Ivoire, the situation has become more complex with the implementation of an incentive policy to develop processing. "This year, Côte d'Ivoire has increased the export tax on raw nuts and at the same time has put in place a procedure whereby an exporter is obliged to make an offer to sell to processors before exporting. Normally, exporters must reserve 15% of volumes exported to processors. So when they want to export for example 1000 tons, they have to auction 150 tons for the processors. There is some delay for the answer. All this hinders the exports of Côte d'Ivoire enormously because the procedure is longer than the tax. In a bearish campaign, the decline has doubled in Côte d'Ivoire"Pierre Ricau points out. Two weeks ago, buyers were still paying the minimum price, FCFA 500 per kilo, today the price is between FCFA 350 - FCFA 400 per kilo. " These are good prices for cashew but they are much lower than what producers used to receive in the last three years ."
The situation is not the same in the other countries of the sub-region even if in all countries prices have fallen compared to the previous season. In Burkina Faso and Nigeria, prices are falling but the fall is not sudden and producers have managed to sell the majority of their production before the decline. In addition, in Nigeria, the price today is around CFAF 600 per kilo.
In Guinea Bissau, there are big problems, the government has set a very high minimum price - FCFA 1000 - and some policies, including the Minister of Agriculture, encourage producers not to sell below the minimum price. At the moment, the purchases are made to FCFA 700 for the good quality but that will not remain because the supply is abundant.
In the Gambia and Senegal, prices are starting to fall but remain high, around FCFA 600, FCFA 700 or FCFA 800 per kilo. However, says Pierre Ricau, it is possible that in two to three weeks, prices fall below FCFA 500 everywhere due to the abundance of cashews. What is certain is that the campaign will be very spread with exports until September.
The transformation could be winning
The situation is favorable for processing with lower prices and abundant supply. Pierre Ricau estimates that cashew processing in Africa could double this year. But not all processors are in the same boat. For those who can afford the nut, they are already covered 60 to 70% of their needs. There are about ten companies in Côte d'Ivoire, two in Benin, four in Burkina Faso and two in Ghana. " The factories that in each country had shown that they were successful but could not refuel will do it this year, " says the analyst.
Demand for cashew kernel remains vibrant
In the first quarter of 2018, demand for cashew kernels remains very dynamic in the main consumer markets in Europe and the United States, with a 13.6% increase in imports to 57,802 tonnes. The increase is particularly noticeable in Europe with 29,023 tonnes imported, or nearly 25% more than the first quarter of 2017, according to statistics provided by N'Kalô.
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