<p></p><p>The coronavirus outbreak in China may not have directly impacted the domestic cashew market in India. However, its impact on Vietnam’s cashew trade is a worrying factor for cashew manufacturers in India. While the prices of raw cashew nuts (RCNs) are coming down in the global market, the huge inventory of RCNs that Indian manufacturers bought at higher prices is a cause for concern.Highlighting the impact of corona outbreak on Vietnam’s cashew sector, K Prakash Rao, Chairman of the Mangaluru chapter of the Confederation of Indian Industry (CII) and a cashew manufacturer, told BusinessLine that 20-22 per cent of the Vietnamese cashews were consumed in China before the outbreak of coronavirus. This had helped Vietnam realise good value from the Chinese market.</p> <p>However, following outbreak of coronavirus in China, Vietnam is now not in a position to sell cashew there, and is stranded with huge unsold cargoes. Referring to the above situation, Walter D’Souza, former Chairman of the Cashew Export Promotion Council of India (CEPCI) and a cashew manufacturer from Mangaluru, told BusinessLine that Vietnam had to find an alternate market immediately. As a result, it was forced to bring down the prices of cashew kernels in markets such as the US and Europe. Stating that Vietnam is the major competitor for India in the international kernel market, Rao said both India and Vietnam have huge processing capacities. In fact, both these put together import around 10 lakh tonnes of RCNs from nations in East and West Africa. While Vietnam largely caters to the global market, Indian cashew kernels are mostly consumed in the domestic market, which is expanding by 7-8 per cent year-on-year.</p> <p>He said Vietnam is now content meeting its requirement of RCNs from its own production and from Cambodia. The prices of RCNs in these market have dropped to $1,200 a tonne from $1,500 a tonne to compensate for the drop in the prices of kernels. He said the reduction of Vietnam’s processing capacity following the coronavirus outbreak in China has led to its absence from most of the West African-origin RCN markets such as Ivory Coast, Benin, Nigeria and Ghana.</p> <p>Stating that India depends on East African crop ― particularly from Tanzania ― from September to March every year, Rao said most processors in India bought Tanzanian RCNs at around $1,650 a tonne, and bought good quantities of the Ghana crop at $1,550 a tonne. These stocks are now being shipped to reach Indian shores in March. He said the absence of Vietnamese buying has suddenly led to the decline in prices of RCNs by $200-250 a tonne. This has caught everyone unawares here. Stating that the sentiment is very low among cashew manufacturers in Karnataka, Subraya Pai, president of the Karnataka Cashew Manufacturers’ Association, told BusinessLine that processors in the state have imported huge quantities of RCNs from Tanzania, and also placed orders for shipments from Ghana.</p> <p>D’Souza said most of the Indian cashew kernels from East African RCNs would have gone into the international market in the normal course. With Vietnam bringing down prices, there is now larger disparity in the international market. As a result, these stocks may not be exported from India. Terming the domestic market as a ‘discounted just-in-time market’, he said if someone wants to buy, say, 10 tonnes of cashew kernel, he would buy three tonnes and get it replenished when needed. He said the cashew kernel inventory in India is at a near-all-time high at this point in time. Carry-over inventory of cashew kernels is creating some amount of pressure on the procurement of RCNs, or the liquidation of kernels itself, he said.</p> <p>Prakash Rao said that though lower prices of RCNs augur well for the industry, the negative sentiments on the finished goods market will slow down consumption initially in anticipation of a drop in kernel prices. Stating that the confusion in the market may slow down this sector, he said: “We hope it will settle down soon, the outbreak contained in the coming months and consumption in the domestic market picks up due to lower prices.”</p><br><p></p>