The coronavirus outbreak in China may well not have straight impacted the domestic cashew market in India. Even so, its impact on Vietnam’s cashew trade is a stressing aspect for cashew brands in India.
Whilst the costs of uncooked cashew nuts (RCNs) are coming down in the world wide market, the substantial inventory of RCNs that Indian brands purchased at better costs is a cause 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 Field (CII) and a cashew maker, informed BusinessLine that twenty-22 for each cent of the Vietnamese cashews were being eaten in China in advance of the outbreak of coronavirus. This had served Vietnam realise superior price from the Chinese market.
Even so, pursuing outbreak of coronavirus in China, Vietnam is now not in a position to offer cashew there, and is stranded with substantial unsold cargoes.
Referring to the above situation, Walter D’Souza, former Chairman of the Cashew Export Advertising Council of India (CEPCI) and a cashew maker from Mangaluru, informed BusinessLine that Vietnam had to find an alternate market straight away. As a end result, it was pressured to provide down the costs of cashew kernels in markets these kinds of as the US and Europe.
Stating that Vietnam is the significant competitor for India in the worldwide kernel market, Rao mentioned both India and Vietnam have substantial processing capacities. In truth, both these set together import around 10 lakh tonnes of RCNs from nations in East and West Africa.
Whilst Vietnam largely caters to the world wide market, Indian cashew kernels are mainly eaten in the domestic market, which is expanding by seven-eight for each cent calendar year-on-calendar year.
He mentioned Vietnam is now material conference its need of RCNs from its personal generation and from Cambodia. The costs of RCNs in these market have dropped to $1,two hundred a tonne from $1,500 a tonne to compensate for the drop in the costs of kernels.
He mentioned the reduction of Vietnam’s processing capacity pursuing the coronavirus outbreak in China has led to its absence from most of the West African-origin RCN markets these kinds of as Ivory Coast, Benin, Nigeria and Ghana.
Stating that India depends on East African crop ― especially from Tanzania ― from September to March every calendar year, Rao mentioned most processors in India purchased Tanzanian RCNs at around $1,650 a tonne, and purchased superior portions of the Ghana crop at $1,550 a tonne. These stocks are now currently being shipped to arrive at Indian shores in March.
He mentioned the absence of Vietnamese shopping for has all of a sudden led to the drop in costs of RCNs by $two hundred-250 a tonne. This has caught every person unawares listed here.
Stating that the sentiment is very small amongst cashew brands in Karnataka, Subraya Pai, president of the Karnataka Cashew Manufacturers’ Affiliation, informed BusinessLine that processors in the condition have imported substantial portions of RCNs from Tanzania, and also put orders for shipments from Ghana.
D’Souza mentioned most of the Indian cashew kernels from East African RCNs would have long gone into the worldwide market in the ordinary course. With Vietnam bringing down costs, there is now much larger disparity in the worldwide market. As a end result, these stocks may well not be exported from India.
Terming the domestic market as a ‘discounted just-in-time market’, he mentioned if a person wants to buy, say, 10 tonnes of cashew kernel, he would buy a few tonnes and get it replenished when necessary. He mentioned the cashew kernel inventory in India is at a near-all-time large at this point in time.
Have-around inventory of cashew kernels is developing some total of force on the procurement of RCNs, or the liquidation of kernels by itself, he mentioned.
Prakash Rao mentioned that even though lessen costs of RCNs augur nicely for the business, the detrimental sentiments on the completed goods market will sluggish down usage originally in anticipation of a drop in kernel costs.
Stating that the confusion in the market may well sluggish down this sector, he mentioned: “We hope it will settle down quickly, the outbreak contained in the coming months and usage in the domestic market picks up because of to lessen costs.”