<p>Get ready for some cashew price shock. <br></p> <p>The global popularity of the kidney-shaped nut has been growing faster than any other tree nut - even almonds. Demand jumped 53 per cent since 2010, industry data shows.Now the worst drought in a century for Vietnam, the largest exporter, is raising concern that supplies will be even tighter in a market valued at US$5.2 billion ($7.2b).A lack of rain in the once-fertile Mekong Delta and elsewhere in Vietnam has cut output of its major agricultural exports including rice, black pepper, coffee and seafood.This year's cashew harvest fell 11 per cent, and domestic prices jumped by as much as a third to an all-time high, a growers' group estimates. That spells trouble for buyers in the United States, by far the biggest importer."There's been no year like this year," Nguyen Duc Thanh, chairman of the Vietnam Cashew Association, said in Ho Chi Minh City.Prices would probably remain high until the next harvest, early next year, said Thanh, who has been in the industry for three decades.While peanuts, which grow underground, are by far the most popular in the nut world, cashews have overtaken walnuts and pistachios in recent years to trail only almonds in the US$30b market for tree nuts, International Nut and Dried Fruit Council data shows.Global cashew consumption in 2014, the most recent data available, reached a record 716,682 metric tonnes, up from 469,241 tonnes in 2010. <br></p> <p>Rising demand, including from China and parts of Europe, helped spark a 70 per cent jump in exports over a decade to 503,713 tonnes in 2014.A quarter of all shipments end up in the US, to be eaten as a snack or used to make foods such as protein bars and cashew milk.India accounts for almost a third of global consumption and is the second-largest exporter. Ivory Coast is the number two producer, followed by Vietnam.Cashew trees are usually grown commercially in places where they can get a lot of rain and warm weather year round, like in southeast Vietnam.But over the past year, an unusual dry spell has left 2 million people in the country with acute water shortages and 18 of 63 provinces were in a state of emergency as of May, according to the United Nations Food and Agriculture Organisation.Losses in agriculture, a major source of export revenue, may prevent the economy from reaching the Government's growth target this year.In Binh Phuoc province, home to more than half of Vietnam's crop, 45-year-old Hoang Thuy Duong says he got just 8 tonnes this year, compared with his usual average of 11 tonnes.The drought "has stunted many of my cashew trees, keeping them from producing buds, much less flowers," said Duong, who has spent more than two decades farming 4ha.The domestic price of raw nuts has jumped to 52,000 dong (US$2.33) a kilogram, the highest on record, from 38,000 dong at the start of the year, according to the cashew association. <br></p> <p><b>Shelled nuts</b></p> <p>To be sure, Vietnam's cashew industry isn't completely dependent upon local farmers.About two-thirds of what it processes is grown somewhere else.West Africa accounted for about 46 per cent of the world's cashews in 2015, and most of those nuts are processed in India, Vietnam or Brazil.Processing is labour-intensive. Trees produce an oval-shaped fruit called the cashew apple with a single nut on the outside.Once harvested, the shells are softened by steam and then cracked by hand. The kernels are dried, peeled and sorted by size and quality.Workers often coat their hands with oil to limit exposure to skin-irritating toxins in the fruit, similar to those in poison ivy.So, even with a smaller domestic crop, Vietnam's exports will probably rise this year, partly because of a big jump in production from Ivory Coast.Vietnam may import about 800,000 tonnes of raw nuts in the shell this year, twice the amount grown locally, according to Thanh of the cashew association.While the country accounts for about 15 per cent of global production, it supplied 58 per cent of exports in 2014. <br></p> <p><b>More exports</b></p> <p>The Vietnam Cashew Association estimates exports this year will reach 300,000 tonnes of processed nuts - up from 286,000 tonnes last year - with 34 per cent going to the US.In the first 10 months, cashews accounted for US$2.33b of Vietnam's US$144b in exports, reflecting a rise in the volume of processed kernels as well as higher prices, said the General Statistics Office in Hanoi.The full-year total may reach an all-time high of US$2.7b, topping last year's record of US$2.4b, the association said.While increased output from Africa may offset lost supply in Vietnam, rising demand is still affecting the market for processed nuts.Export prices on average had jumped 22 per cent this year to US$7809 a tonne in August, Thanh said, citing data from Vietnam's Ministry of Industry and Trade.Shipment prices averaged US$9000 per tonne on an FOB basis in Ho Chi Minh City this week, he said."We expect global demand to grow in the low single digits this year against a supply that is expected to be flat or slightly lower than last year," said Amit Khirbat, a senior vice-president at Olam International, a trading company that is the largest exporter of cashews in Vietnam."The high prices this year could affect overall demand next year." <br></p> <p> <b>By the numbers: Cashew nut exports</b> <br></p> <p>• 58% - Vietnam*</p> <p>• 23% - India</p> <p>• 5% - Netherlands</p> <p>• 3% - Brazil</p> <p>• 2% - Indonesia</p> <p>• 9% - Rest of world <br></p> <p>* Vietnam processes raw domestic nuts as well as imports from Africa<br></p>