Cashew prices slide 8% on selling pressure

Spot cashew prices are on a steadily decline. In February, the prices came down from Rs 4,651 per carton (1 carton = 22.68 kg) to Rs 4,244, down 8 per cent, on selling pressure from stockists throughout the country.

Surprisingly, cashew prices firmed up in mid-January to Rs 4,735 from Rs 4,652 on January 2 and slipped again to the previous level due to reports of good crop this season. Traders are anticipating 10 per cent rise in output this year.

Despite huge volatility in spot prices, March futures on the National Commodity and Derivatives Exchange (NCDEX) remained unchanged throughout the second fortnight of January and February due to paucity of trade volumes.

According to data sourced from the NCDEX website, only 100 cartons of cashew was traded for March futures. Similarly, open interest remained throughout the month at 100 cartons.

Total trading volume in the first fortnight of January, however, surged to 2,100 cartons. But, throughout the second half of January and February, no trade took place, the data obtained from NCDEX website said.

As most of the trade is taking place in physical market, futures volume have remained thin, said a Mumbai-based trader.

"Selling pressure was optimum today as large stockists wanted to get rid of old stocks as fresh stocks are expected to hit the market soon. Traders want zero opening stock for the new season," a trader at Agriculture Produce Marketing Committee (APMC) at Vashi said.

Cashew is a plantation crop requiring significant initial investment. So government policies with regard to production, processing, exports and imports in all the producing nations have a bearing on prices.

India produces about 5 lakh tonne of cashew per year and imports similar quantity from Africa. After processing, the country exports around 2 lakh tonne.

A good cashew crop this year is expected to increase domestic availability.

Cashew is traded as cashew kernels in several grades, based on size, colour and other quality parameters of cashew.

Domestic cashew market is largely controlled by the unorganised sector, therefore, the actual production-demand can not be determined, a Kerala-based trader said.

Cashew price may decline further by Rs 100-200 in the weeks ahead due to oversupply in the local market and pressure for clearance of old stocks.