The coronavirus outbreak in China may perhaps not have specifically impacted the domestic cashew sector in India. On the other hand, its effects on Vietnam’s cashew trade is a worrying issue for cashew producers in India.
While the rates of raw cashew nuts (RCNs) are coming down in the world sector, the massive inventory of RCNs that Indian producers bought at bigger rates is a lead to for concern.
Highlighting the effects of corona outbreak on Vietnam’s cashew sector, K Prakash Rao, Chairman of the Mangaluru chapter of the Confederation of Indian Sector (CII) and a cashew manufacturer, advised BusinessLine that 20-22 for each cent of the Vietnamese cashews have been consumed in China before the outbreak of coronavirus. This experienced helped Vietnam realise excellent price from the Chinese sector.
On the other hand, pursuing outbreak of coronavirus in China, Vietnam is now not in a place to offer cashew there, and is stranded with massive unsold cargoes.
Referring to the above situation, Walter D’Souza, former Chairman of the Cashew Export Advertising Council of India (CEPCI) and a cashew manufacturer from Mangaluru, advised BusinessLine that Vietnam experienced to obtain an alternate sector immediately. As a outcome, it was pressured to bring down the rates of cashew kernels in marketplaces these types of as the US and Europe.
Stating that Vietnam is the key competitor for India in the worldwide kernel sector, Rao said each India and Vietnam have massive processing capacities. In truth, each these set jointly import all-around 10 lakh tonnes of RCNs from nations in East and West Africa.
While Vietnam mainly caters to the world sector, Indian cashew kernels are mainly consumed in the domestic sector, which is increasing by 7-eight for each cent calendar year-on-calendar year.
He said Vietnam is now articles meeting its requirement of RCNs from its possess generation and from Cambodia. The rates of RCNs in these sector have dropped to $one,two hundred a tonne from $one,500 a tonne to compensate for the fall in the rates of kernels.
He said the reduction of Vietnam’s processing ability pursuing the coronavirus outbreak in China has led to its absence from most of the West African-origin RCN marketplaces these types of as Ivory Coast, Benin, Nigeria and Ghana.
Stating that India depends on East African crop ― particularly from Tanzania ― from September to March every calendar year, Rao said most processors in India bought Tanzanian RCNs at all-around $one,650 a tonne, and bought excellent portions of the Ghana crop at $one,550 a tonne. These stocks are now becoming delivered to get to Indian shores in March.
He said the absence of Vietnamese acquiring has abruptly led to the drop in rates of RCNs by $two hundred-250 a tonne. This has caught all people unawares here.
Stating that the sentiment is extremely small among cashew producers in Karnataka, Subraya Pai, president of the Karnataka Cashew Manufacturers’ Affiliation, advised BusinessLine that processors in the condition have imported massive portions of RCNs from Tanzania, and also positioned orders for shipments from Ghana.
D’Souza said most of the Indian cashew kernels from East African RCNs would have long gone into the worldwide sector in the standard class. With Vietnam bringing down rates, there is now much larger disparity in the worldwide sector. As a outcome, these stocks may perhaps not be exported from India.
Terming the domestic sector as a ‘discounted just-in-time market’, he said if another person needs to get, say, 10 tonnes of cashew kernel, he would get 3 tonnes and get it replenished when needed. He said the cashew kernel inventory in India is at a in close proximity to-all-time large at this issue in time.
Have-above inventory of cashew kernels is developing some quantity of strain on the procurement of RCNs, or the liquidation of kernels by itself, he said.
Prakash Rao said that while reduced rates of RCNs augur effectively for the marketplace, the adverse sentiments on the concluded items sector will sluggish down use initially in anticipation of a fall in kernel rates.
Stating that the confusion in the sector may perhaps sluggish down this sector, he said: “We hope it will settle down before long, the outbreak contained in the coming months and use in the domestic sector picks up due to reduced rates.”