Be careful of transactions
Recently, the Standing Board of Vietnam Cashew Association (Vinacas) recommends that enterprises must be very careful about transactions at this time; consider carefully before deciding to buy raw cashew from African countries, including neighboring Cambodia.
Accordingly, it is necessary to analyze information from many sources, thereby assessing the market situation and other impacts, especially the impact of Covid-19 and the actual capabilities of enterprises before deciding to sign a contract of purchase. raw cashew nuts, cashew kernels, including whether or not to reserve raw materials or finished products in stock or not, to ensure the business and production efficiency of enterprises. If there is a balance between costs and output prices, or no output contract, do not rush to buy the raw.
In the export market share of cashew nuts of businesses Vietnam, the US accounted for nearly 30%, the EU and other countries accounted for nearly 56%, China accounted for more than 14%. Although the ratio is not much, China has long played a significant role in interacting on price with other markets. The stability of the Chinese market is a balance, contributing to keeping the prices of the remaining markets.
With the current situation, when Covid-19 epidemic has not been able to determine exactly how long it will last, Vinacas said that the export of cashew kernels to China is more or less disadvantageous. In 2020, China will consume more or less the amount of cashew is always a question and an issue that needs to be paid attention regularly. Experience shows that, once the consumption of cashew kernels in the Chinese market weakens, the remaining markets will be an opportunity for importers to “crush” cashew kernel prices down.
In the context of the current turmoil, it is likely that Western importers will reduce orders to get lower prices. Consequently, the first West Africa raw cashew import contract negotiation will also be very tough. And even more difficult with signed contracts, once you want to renegotiate.
Hard problem
Another fact, compared to cashews, Chinese people consume much higher amounts of almonds. Because Covid-19 is complicated, the amount of almonds imported into China plummeted, causing the world market price of almonds to drop. As a result, like the previous times, the part of consumers in the world switched to using almonds, making the consumption of cashews affected by chains.
Even after the Covid-19 epidemic has passed, the lives of Chinese people will be difficult for a while to return to the old order, so the amount of imported goods will decrease compared to previous years – when Cashews are not the main food in the meal. That is why Vinacas forecasts that cashew kernel export output to China may decrease in 2020. Currently, cashew kernel prices are adjusting in a negative direction, affecting business performance of businesses. In contrast, with the sharp decline of cashew prices, raw material prices in Africa have decreased less. This is a difficult problem for businesses when balancing input and output costs. With these analyzes, Vinacas thinks that cashew industry growth will be affected. If 2019 is a “positive” growth, then 2020 is likely to be a “negative” growth.
But there is another view. According to an analysis by an industry expert, “psychosis” is dominating the cashew market, as the Covid-19 epidemic is fueling unexpected, unpredictable fluctuations. This is an important market, but the market share is only about 10% of the world's consumption of cashew nuts.In addition, every year, Chinese imports (of which, more than 90% are imported from Vietnam). ) still dropped significantly in February and March, after peak consumption on Chinese New Year.
From that point on, is it still too early to make concessions in panic? If the epidemic continues to expand for a few more months, its impact will certainly be strong; but if controlled at the end of March, the impact on cashew nut consumption in China and around the world will be negligible.
In the context of strong growth in world demand and the limited level of inventories left over from the previous season, it seems that the panic that started earlier has been exaggerated and could lead to increased volatility ( discount then rebounds strongly) in the next cashew season.
Source: Sai Gon Giai Phong Newspaper
