GAMBIAN CASHEW MARKET BULLETIN ISSUE no 8 OF JUNE 9 TH, 2015 CASHEW MARKET IN THE GAMBIA Expected evolution of RCN prices Short term: Middle term: Slight increase Stabilization The marketing season reached its height with the reception of the second harvest. The quality of the crop is quite good. Prices have increased again during the last week across all the producing regions, and are now close to their maximum. Farmers continue to take advantage of the high prices and sell the stocks as soon as the nuts are dried. However, prices are expected to level off during the coming weeks, as the campaign gets closer to its end. In the North Bank Region, cashew is negotiated around 60 GMD/kg both at farm-gate and on weekly markets. Deliveries to Banjul (across the river) are at 65 68 GMD/kg. In the West Coast Region prices increased also. Farm-gate prices rose to 60-63 GMD/kg, from their last week level of 57-59 GMD/kg. In the Foni region, collectors are paying 60 GMD/kg for larger quantities of cashew (against 55 GMD/kg during the last week), and the 1.5 kg tomato tin is being traded at 85 87 GMD (57 58 GMD/kg). Deliveries to Brikama warehouses are realised around 65 GMD/kg, and at Denton Bridge/Banjul at 67 GMD/kg. In the Lower River Region, where stocks are being replenished with the second harvest coming from the Kiyang West district, prices have also increased considerably from their previous level of 50-52 GMD/kg, reaching now to 59 60 GMD/kg.
GMD/kg 70 60 50 40 30 20 10 RCN farm gate prices April/June 2015 - weeks 14 to 22 w 14 w 15 w 16 w 17 w 18 w 19 w 20 w 21 w 22 Highest Lowest CASHEW MARKET IN OTHER WEST AFRICAN COUNTRIES BENIN Very limited stocks are reported to be still available, but their quality is very poor. The number of buyers competing for them is reduced. The marketing season is practically finished. BURKINA FASO The trade season is likely to end during the coming weeks because the scarcity of available stocks. The winter rains degraded the average crop quality at 37 to 44 lbs. /bag. Buyers are not ready to compete for cashew with KOR below 40 lbs. / bag. Farm-gate sales are negotiated at prices lower than the past week, between 465 and 500 FCFA/kg. Cashew trackers are buying cashew in Bobo Dioulasso, Orodara and Banfora at about 575-580 FCFA/kg, while wholesales of cashew with KOR above 40 lbs. / bag are made between 580 and 590 FCFA/kg. CÔTE D IVOIRE Harvesting is completed in all producing areas. The marketing season has almost ended. Trade is largely limited by the very low availability of stocks and their poor quality, following rainfall and high temperatures which occurred during the past couple of weeks. Farm prices decreased further between 450 and 525 FCFA/kg. Deliveries to Abidjan port are down to between 575 and 600 FCFA/kg and the FOB export prices have fallen between 1100 and 1200 US$/ton. MALI The availability of the remaining cashew stocks is limited, cashew quality is poor and the number of buyers is reduced. The situation is similar to that in Burkina Faso and Côte d Ivoire. However, the farm gate prices in Sikasso, Kolondiéba and Koutiala remained at
their last week levels (375-450 FCFA/kg, 485-500 FCFA/kg and 450-500 FCFA/kg respectively). On the contrary, wholesale prices decreased in Sikasso and Bougouni from 500-525 FCFA/kg the last week, to 435 505 FCFA/kg. They amounted to 475-500 FCFA/kg in Loulouni and Yanfolila. Further slight decreases in prices are expected until the foreseen end of the campaign during June. NIGERIA The cashew season is almost finished. The quality of the very limited cashew stocks still available is poor. SENEGAL Despite the arrival of the second harvest, cashew offer cannot match the strong international demand and the market competition is very strong. Trade will remain in full swing during the coming weeks. Prices are expected to continue their slight increase in the short term and level out at the top of their current range in the medium term. The Senegalese raw cashew being currently priced higher priced than in Guinea Bissau, some traders prefer to purchase large quantities at lower prices in Guinea Bissau. The cashew purchased is stocked in Ziguinchor, waiting to be transferred to Banjul port for export. The cross border trade has intensified since the last week. Farm gate prices in the Fatick area around Sokone (close to the Gambian North Bank region) increased to around 750 FCFA/kg, as the offer cannot cope with buyers requirements. In Casamance (Ziguinchor, Sedhiou, Kolda), buyers remain active, after having purchased important quantities of cashew the past week. Farm-gate prices have stabilizes between 600 and 700 FCFA/kg, and the wholesale prices in large cities average 750 FCFA/kg. INTERNATIONAL CASHEW MARKET 2015 prospects Some experts are quite optimistic about the prospects of the market until the end of this year because current inventories in North America and Europe are reported to be relatively low and the demand for cashew is growing steadily worldwide. Cashew consumption is increasing not only in North America and Europe, but also in China and India (in particular during the Ramadan period between 18 June and 17 July). Port developments The 2nd Africa Dry Bulk Conference 2015 held in Dar-Es-Salam/Tanzania on 23-24 June is Africa's only such event focusing on dry bulk challenges, solutions on improving cargo handling and the future of dry bulk terminals in Africa. Several projects in West African cashew exporting countries announced during this conference are expected to facilitate the
future cashew export trade. Côte d Ivoire: China Exim bank has approved a loan of 460 billion CFA for the Extension Programme of the Abidjan port. The funds will be used to widen and deepen the Vridi canal to permit the berthing of 25 000 to 50 000 ton vessels, and for the construction of a container terminal and a Ro-Ro terminal. Operations are expected to begin in 2015 with completion of all phases expected by 2021. An Omani civil and construction services firm will also be investing USD 700 million in a multi-purpose dry port and grain silos. The Project will be implemented on a public - private partnership basis. Ghana: The Meridian Port Services consortium has signed an MOU for the expansion of Tema Port with the Ghana Ports and Harbours Authority. The project includes four new deep-water berths and an access channel that can accommodate larger vessels. Moreover, there are plans for the development of the Buipe River port on the Volta River. Guinea Bissau: The construction of a deep-water port at Buba may start following the intention of Bauxite Angola Company to participate in the project. Mozambique: The newly formed Portos do Cabo Delgado will be overseeing the construction of a two new ports at Palma and at Pemba, in the northern Mozambique. The government has signed a lease agreement with Portos do Cabo Delgado for the two port terminals. Tanzania: The rehabilitation and expansion of Mtwara port, for which the government has earmarked an investment of USD 214 million, will expand the national port capacity to about 28 million tons/year. The implementing agency is the Tanzania Port Authority. The port will be able to berth seven ships from the current four. 100 hectares will be done up into a free port zone. RAW CASHEW PRICES The marketing season is ending in Benin, Burkina Faso, Côte d Ivoire, Ghana and Nigeria. The last, very limited cashew stocks available in these countries are of poor quality and their price is decreased accordingly. In Guinea-Bissau, Senegal and The Gambia the season is on-going and the good quality cashew available fetches very good prices. The prices are foreseen to continue increasing slightly in the short term and stabilise afterwards. CommodAfrica and Rongead quoted the CIF prices below for raw cashew of West African origin, in US$/ton. Origin and quality KOR (lb.) 8 June 2015 Short term Trend Medium term Benin 46-47 1250-1300 Slight decrease End of season, no more trade Burkina Faso Slight decrease End of season, no more trade Côte d'ivoire 45-46 1200-1300 Slight decrease End of season, no more trade Ghana 45-46 1200-1300 Slight decrease End of season, no more trade Guinea Bissau 51-52 1500-1650 Slight increase Stabilisation
Mali unavailable Slight decrease Season finished no more trade Nigeria 44-45 1100-1200 Slight decrease End of season, no more trade Senegal, Gambia, 49-50 1500 1600 Slight increase Stabilisation Source: http://www.commodafrica.com/les-cours-des-matieres-premieres-du-21-mai-2015 The following chart based on Rongead price information over the past two months illustrates the decreasing trend in West African raw cahew prices of lower quality (KOR inferior to 48 lb. /bag) and the slight increase in price trend of very good quality cashew (KOR above 48 lb. /bag). 1600 1500 1400 1300 1200 1100 1000 900 800 Raw cashew C&F prices delivered to India April-8 June 2015, US$/ton w 14 w 15 w 16 w 17 w 18 w 19 w 20 w 21 w 22 KOR < 48 KOR > 48 The near-stagnation of prices of raw cashew with KOR above 48 48 lb. /bag and the decline of prices of cashew with KOR above 48 lb. /bag prices since mid - April to date was caused by several developments including: The worrying news of contract defaults and rejection of poor shipments at the beginning of the West African marketing season; The restricted purchases due to the high prices at origin. This year, the raw cashew prices went up during the peak harvesting period, mainly because of crop shortfalls in many growing areas and initial speculation about the size of crop shortages; The relative decrease of Vietnamese import needs and increase of cashew kernel output by about 15% as a result of the expansion of mechanical processing; The decreased Indian import requirements following the slowdown of the Chinese demand due to the restrictive measures taken by the Chinese government against cashew smuggling across the border With the ease in pricing, importers and processors have already covered a large part of their raw cashew needs. Unless an unforeseen event occurs, prices may slightly decrease again, reaching the bottom in June/July.
CASHEW KERNEL PRICES Demand for cashew kernels remains firm, with continuing regular orders coming from Asian, European and American markets. The Public Ledger of June 8 th quoted the following spot prices for cashew kernels in US$/lb., compared to the highest and lowest price peaks recorded over the past 52 weeks. Origin Grade Type of price Price period 52 weeks high 52 weeks low Benin 320 EXW Benin 3.43 3.87 3.41 450 EXW Benin 3.23 3.52 3.23 240 EXW UK 4.07 4.10 3.90 India 320 EXW UK 3.85 4.02 3.50 450 EXW UK 3.68 3.68 3.26 Kenya 320 EXW Kenya 3.58 3.72 3.46 450 EXW Kenya 3.35 3.47 3.26 320 EXW Mozambique 3.87 3.87 3.46 Mozambique LP EXW Mozambique 1.70 1.70 1.70 WS EXW Mozambique 1.90 1.90 1.90 240 EXW Tanzania 3.93 4.12 3.93 Tanzania 320 EXW Tanzania 3.58 3.72 3.44 450 EXW Tanzania 3.35 3.47 3.27 Vietnam 240 EXW UK 4.15 4.15 3.90 320 EXW UK 3.85 3.85 3.45 450 EXW UK 3.70 3.70 3.25 Zambia 320 EXW Zambia 3.58 3.72 3.48 450 EXW Zambia 3.35 3.47 3.21 Rongead indicates the following evolution of WW 320 cashew kernel prices FOB Asian ports since April 2015: 3.80 3.70 3.60 3.50 3.40 3.30 3.20 WW 320 cashew kernels prices FOB Asia, US$/lb., April - 3 June 2015 w 14 w 15 w 16 w 17 w 18 w 19 w 20 w 21 w 22 Min Max Cashew kernel prices rose steadily this year, from an average of 3.53 US$/lb. in January to 3.85 US$/lb. in the first week of June.
The kernel market is expected to remain steady to firm at least until August/September. Prices may eventually increase slightly (10 to 15 cents/lb.) with the restart of the Chinese demand. Cashew kernel substitution Cashew kernels are substituting almonds and pistachios for several end-uses including snacks, stir-fry dishes, nut flours, nut butters or pastries. The amount of cashew used as substitute for these other nuts is dependent on their relative prices. The chart underneath illustrates the evolution of Indian and Vietnamese cashew WW320 prices between January and the beginning of June 2015, compared with the prices CIF NW Europe of US shelled almonds types Shelled Standard Sheller Run and Non Pareil Select 23/25, and the FCA prices of Iranian pistachios 20/22. 5.1 4.9 4.7 4.5 4.3 4.1 3.9 3.7 3.5 Evolution almonds, pistachios and cashew prices January - June 2015, US$/lb. Almonds, US Shelled Standard Sheller run, CIF NW Europe Almonds, US Non Pareil select 23/25 shelled, CIF NW Europe Pistachios, Iranian 20/22, raw in shell, FCA Cashew Kernels, Indian 320s, EXW UK Cashew Kernels, Vietnamese 320s, EXW UK (USD/lb)* Source: Public Ledger, 8 June 2015 Almond prices increased much faster than the cashew ones since the beginning of the year, i.e. between 7% and 13% depending on type and origin, and are foreseen to remain strong and firm. If the weather will remain dry until October and demand will stay where it is now, prices are expected to continue their up move. Most traders estimate that even if some rain may occur, the current record high prices will not push down sufficiently the global demand in order to produce a substantial drop in prices. Moreover, USDA estimated the 2015 crop to be at least 1% less than the last year and 8% less than in 2013. With the continued uncertainty of the real decrease in the Californian almond output, growers will most likely to continue selling the remaining 2014 crop stocks at the current record prices or higher, remaining hesitant to sell any of the 2015 crop. Almond buyers are in a very risky situation at least until the end of October this year, when the first shipments of the 2015 crop will start arriving in the market. Cashew is therefore expected to continue substituting almonds in many end-uses. This will
contribute to maintaining the high level of cashew prices till the end of this year. As far as the pistachio market is concerned, the US crop was below expectations in 2014, but harvests in other producing countries were good. Many pistachio producers and traders do not expect the 2015 Californian crop to be larger than in 2014 due to water shortages and warm winter weather. The Iranian 2014 crop is estimated at 245,000 tons, out of which 80% are already exported. The forthcoming 2015 crop which will start arriving between end September and mid-october is expected to not exceed 180,000-190,000 tons. Up to now, the Iranian sales of pistachios to U.S. and Europe have been hampered by sanctions. However, the talks between Washington and Tehran on the resolution of the decade-long nuclear dispute will close toward this end of June. Iran is ready to return to the global pistachio market, providing fresh supplies. Prices of Iranian pistachios decreased by nearly 6% over the first 6 month of this year; the prices of Californian pistachios are now weaker than last year. It is unlikely that almond market prices will slump because of relatively limited harvests expected in 2015. Therefore, the substitution of pistachios by cashews is likely to continue at the current pace throughout 2015/2016. EVOLUTION OF CURRENCIES VERSUS US$ The European Union is a critically important cashew trade destination; the behaviour of the Euro has an impact on the prices and volumes of cashew shipped. In April, at the beginning of this marketing season, the Euro experienced its worse quarter since its inception, depreciating by 11.3%, with an exchange rate of 1.07 euros to the US$. This was mainly due to the policy of the European Central Bank, which attempted to reactivate the economy by devaluating its currency. Exchange rate of Euro to US$ fluctuated afterwards. The Euro is expected to continue passing through a high volatility period at least until August/September, and possibly get much worse if Greece may exit the European Union. OANDA currency information quoted the following exchange rates of selected currencies against the US dollar from May 7 th to June 8 th, 2015: Country/currency US$ versus local currency, 2015 7 May 11 May 15 May 22 May 31 May 8 June Gambia GMD 42.529 42.580 42.610 42.608 42.550 42.550 CFA Franc BCEAO - FCFA 578.767 582.850 576.338 587.690 597.950 584.290 Nigerian Naira NGN 196.306 199.000 197.387 197.173 199.000 189.900 Indian rupee INR 63.934 63.622 63.690 63.551 63.683 63.955 European Union Euro 0.883 0.892 0.878 0.899 0.910 0.899 Source: Oanda forex trading http://www.oanda.com/currency/converter/ The official interbank rate for trading purposes of the Central Bank of the Gambia (http://www.cbg.gm/) on June 8 th was 39.51 US$/dalasi. The same day, the Gambian Trust Bank Ltd (http://www.tblgambia.com) indicated the dalasi selling rate at 40 US$/dalasi at and the buying rate at 35.00 US$/dalasi.
ADVICE TO GAMBIAN CASHEW STAKEHOLDERS - Farmers: sell each week all the harvest, just after drying, to take full advantage of the current prices, which are likely to decrease with the decrease of demand and prices of lower quality cashew; - Traders and exporters in Gambia, Guinea Bissau and Senegal, where the trade season is progressing: avoid concluding new contracts, or limit them to small quantities and continue to trade on small revolving contracts, in order to avoid excessive risks in the current context of strong demand, but a possible slow down of orders from Asian importers. - Local processors: purchase as much raw cashew as possible, as quickly as possible and at the best price possible, diversifying your channels and supply areas. Enter into forward sale contracts for cashew kernels until the rest of the year and the beginning of 2016 for current profitable market prices