Prices have continued to ease over the last month as the market has been slowly absorbing the excess RCN that’s available in the market. This has continued to put financial pressure on processors in Vietnam, which will now likely lead to further bankruptcies in the cashew industry. On top of this the banks in Vietnam that finance processors are now more cautious than ever, therefore the flow of finance will also be restricted which may impact supply capacity over the short-term.
However if you step back and look at the fundamentals, the supply of RCN is still more than sufficient to get the market through until the northern hemisphere crop, which will begin being harvested from Feb onwards. In saying that some are questioning whether the excess RCN sitting at port in Vietnam can even be used due to its poor quality, which would change the picture. If this is the case then the market may be closer to the bottom than we think.
From the demand side, European and US imports are expected to remain subdued over the coming months as retail prices on shelf still remain at the same price they were 12 months ago. When these do eventually change the expectation is that demand should grow. When this happens is anyone’s guess.