ACA CASHEW iFORUMS 2023

MARKET UPDATE &

THE AFRICAN PROCESSING
REVOLUTION
Global Market Encounter 49
with Jim Fitzpatrick – 29th March 2023

Webinar ID: 956 3280 2374

Password: 2023
CASHEW MARKETS

THE AFRICAN PROCESSING REVOLUTION

A NEW PROCESSORS EXPERIENCE – COASTAL NUTS TANZANIA

QUESTIONS AND ANSWERS

Market Update
Cashew Kernels Prices
CASHEW KERNELS FOB VIETNAM - HIGH LEVEL PROCESSORS 3-6 MONTHS FORWARD

$4.00 WW240 WW320 FS/WS LWP WW320 2 year avg. WW320 2 year high WW320 2 year low

$3.50

$3.00

$2.50

$2.00

$1.50

$1.00

$0.50

$0.00
Cashew Kernels Prices
PRICE BENCHMARKS Chart Signals
Vs 2 year High - 22% 1. Prices are below the 2 year average but above the low.
2. Differentials between grades are compressed.
Vs 2 year low + 6% 3. Compressed grades seem to happen before price moves –
Vs 2 year avg. - 7% Jun-08, Oct-11 , Oct-15, Jun-17, Jun-18.
Vs 5 year avg. - 14% 4. Differences between processors widening - $2.56 -2.75.

Markets Signals
GRADE SPREADS BENCHMARKS
WW320 Vs WW240 2 year avg. - 48% 1. Facts - More buying recent weeks; Prices have moved up.
WW320 Vs WS/FS 2 year avg. - 6% 2. Estimate - Lower than usual forward cover.
3. Estimate – Inventories in destinations falling; Spot markets.
WW320 Vs LWP 2 year avg. - 8% 4. By products prices down.
Cashew Kernels Prices

Producers of high
quality cashews
should target this
range
RCN Market

• Early offers high: Prices lower now.

• Vietnam focussed on Cambodia

• Vietnam Imports strong

• India old crop stocks reduced

• Ghana trade brisk.

• Benin out of the market until May.

Vietnam Processors Margins still under pressure

Lower imported RCN improves

calculation

Domestic & Cambodia RCN still high.

Minimum sustainable margin level Lower by product price reduces

margins

India farm gate starts high.

West Africa efficient processors

workable - big issue is marketing.

CiV RCN US $ 1160 Cfr

Cambodian RCN $1300 FG undried.
Vietnam processing $150/t RCN/ India $350/t / CiV $450/t RCN
Vietnam imports contradict market talk

Imports strong +68% vs 2022

New record for Jan – 15th March

Jan & Feb

Cambodia + 107%
Tanzania + 95%
CIV - 7%
Nigeria +191%

Signals?
• Lower carry in.
• Poor national crop.
• Early Cambodia crop.
• Expected competition from
India.
India Imports & New crop
 Strong start on imports.

 Carry out stock low / remaining is poor

quality.

 Strong demand start/Cooling a little

 West Africa arrivals April.

 Benin no shipments until May.

CRISIL Analytics Forecast
1. Strong processor development & revenue growth
2. Strong growth in demand
3. BUT operating margins only 7%
VIETNAMS KERNELS EXPORTS – STRONG 1ST QUARTER

February + 35% vs. 2022

2nd highest “First 10 weeks” ever
FH March + 27.5% vs. 2022 Strong Feb & March FH after weak January
 Production – Major talking points
India
Core d’Ivoire Good crop forecast
Official forecast 1 m+ 750,000 Mixed weather
reports Vietnam
First flush poor due weather. Poor crop ~300,000
FG spiked but now workable Imports strong
circa 300-350 CFA

Ghana
Crop improving Ests. vary 85k -140k.
Cross border activity.
Initial FG price spike eased

Benin
Forecasts good range 160- Cambodia
200,000 t. Crop >2022<2021
No export until May. Early crop
Prices FG $1300-1350
Policy 25% processing
Our Production estimate slightly lower but still 2nd largest crop ever.
 RCN Processors
Production
Not much room for price Kernels/RCN gap closing :
Good crop - weather watch
rises ; Expect further falls Margins not sustainable i.e.
India and West Africa
but limited by Indian less processing or higher
especially Cote d’Ivoire
demand. prices.

Demand N.America Demand Europe Demand India

Worst hit expect buying to Kernels stocks falling; Forecasts remain positive;
continue slow until May. Forward cover low; Look Look for strengthening INR
Very price oriented. for continued buying. vs USD.

Processing Africa
Costs
European demand on the
Freight and energy costs When will demand in the
rise ; Quality/Traceability/
predicted to fall. Inflation West react to low prices ?
Reliability.
to ease.
Premium pricing.
The African Cashew Processing Revolution
THE AFRICAN PROCESSING REVOLUTION

Processing growth is uneven : Pace of growth fluctuates : Under utilized capacity.

What made the revolution possible?

Buyers
needs
Govt
Support

Production
volume
NGO
Support
Technology
Market
Information &
Understanding
 African Cashew kernels in Europe EU MARKET SHARE

African growth rate is double the EU market growth rate.

Africa’ s EU Market share has quadrupled since 2010. In 2022 African processors supplied more
cashew kernels to the EU than India,
Brazil and Indonesia combined.
Sustainability & traceability are important; Brokens are less.
African Cashew kernels in the US

African growth rate 6.5% 5 Year CAGR. Cote d’Ivoire supplied 67% of the total
African supply to US in 2022. Its exports
Africa’ s share grew by 51% in 2022 to 7%. have grown by 29% CAGR 5 since 2017.

Mozambique's exports to the US have

Price is more important; Traceability, quality etc are less collapsed since 2015
 Key challenges for processors

Costs Management Marketing

Manage higher costs vs lower cost Buyers, Labour, Tech. & Sustainability Build and they will come!
RCN
Processing Costs Benchmark
Processing Coast Comparison - $/RCN Tonne Mechanisation
Vietnam Large… $200
Scale
India Typical $350
Raw Material Quality

Factors
Best CiV $360

Efficient Benin $400 Labour skills & training

Efficient CiV $450
Process Management
Mozambique $500

Manual CiV $650

Use of By-Products

Opportunities cost reduction/revenue

Competitiveness can be achieved by balancing  Improved RCN quality/Post harvest.
higher costs of processing against lower costs of  By product development/use.
raw material sourcing , better quality kernels ,  Waste reduction.
traceability and location.  Marketing premium quality
African Processors Advantages & USP’s

A sustainable supply chain with long term solutions.

Real traceability and risk mitigation.

Faster, lower cost delivery, fresher kernels.

Genuine Supply Chain Certification e.g. organic.

Be part of our story – make a difference, profile end products.

Why now?
Hey our cashews RCN CHAIN IS NOT
are sustainable, SUSTAINABLE.
natural & taste RCN TRADED IS NOT TRACEABLE.
great! Will you pay
a higher price?

CONSUMERS
WE LOVE THOSE CASHEWS.
BUT ARE THEY SUSTAINABLE?

This costs a
lot more!

PRODUCERS GOVTS
WE COULD PROCESS HERE COMPETITIVELY FAIR PRICES MEANS HIGHER PRICES
THE TECH THAT MAKES IT POSSIBLE EXPORT TAXES HEADING UP
Is it a revolution or another false dawn?
KPI’S FOR CASHEW PROCESSING DEVELOPMENT
PROCESSED VOLUME % increase of the crop processed
No of operational plants
Prices achieved
PLANT EFFICIENCY Capacity utilization
Unit Cost processing
LABOUR & MANAGEMENT Numbers employed
Management capacity
Training available
VALUE CHAIN Meet buyers requirements
Integrated chain
Impact and sustainability
James Mulhall
Director
Coastal Nuts Tanzania Ltd
Mtwara.
 Thank you very much for
joining us
Special thanks to the
contributors and interpreters.
Want to talk cashews?
Email iss@iol.ie
WhatsApp/Telegram +353879076849
Join The Cashew Club on LinkedIn