The African Cashew Alliance (ACA) has indicated that latest volatility within the international cashew market might trigger many kernel consumers to face again – because the state of affairs might properly dim manufacturing targets of native producers, even in Ghana.
The sharp rise in costs in first-quarter of the yr, properly past even short-term sustainable ranges, created a interval of panic as cashew kernel costs hit US$3.80/lb solely to fall again shortly to ranges round US$3.25/lb from Vietnam, the place they continue to be right this moment.
That fall, in line with ACA, has created a state of affairs by which consumers might consider that additional falls are imminent, as most at the moment are ready to see the following stage. In the meantime, many processors are renegotiating contracts as market rises from US$2.40 to US$3.30/lb are unattainable to handle for processors that also want to purchase their full wants of RCN.
This state of affairs might trigger a questioning by consumers of their cashew enterprise, and should properly result in decrease demand in second-half to finish of the yr.
In the meantime, ACA has noticed that the 2024 crop season in Ghana has seen decrease manufacturing estimates, averaging 25-30 p.c decrease than final yr, 2023.
This case, in line with ACA, makes Ghana the nation worst-affected by climate situations final yr and this planting yr.
“There are indicators that some minor volumes will proceed to stream as a result of some late flowering, however the primary crops are ended. Costs on the farm gate for well-dried and bagged RCN have been reported at GH¢12/kg, however commerce is skinny,” ACA famous.
The Alliance noticed that crop estimation within the nation is at the moment troublesome, as volumes proceed to stream from landlocked international locations to the north and from Cote d’Ivoire.
What really occurred?
There isn’t any doubt amongst most analysts that cashew costs have been unsustainably low after Vietnamese processors, in related panic mode, dropped costs to 14-year lows in mid-2023. RCN costs initially of 2024 season weren’t in keeping with the low kernel costs.
Rumours of crop issues based mostly on El Nino climate patterns began the rise in costs. The fact of a decrease crop in Vietnam, some West African international locations and doubtless India, meant {that a} rise in cashew kernel costs grew to become inevitable.
Costs rose throughout March and April in a reasonably orderly and wholesome method. African processors have been capable of purchase RCN at costs that farmers might dwell with and promote the ensuing kernels on for ahead cargo at a revenue. Definitely, in some international locations high quality was decrease and processing success, as all the time, could be a problem – but it surely was workable.
Ivory Coast and the West African issue
Then the cashew ‘hearsay mill’ kicked in. Pushed by short-term expectations of fast good points, rumours of a crop failure in West Africa gained traction. Many processors within the Asian processing giants had solely their suppliers’ info to depend on. Tales of 30 or 40 p.c crop losses gave the impression to be confirmed by greater costs.
A transfer to droop exports by the Ivorian authorities appeared to verify the issue, and the scene was set for a short-lived speculative bubble.