<p>The average price of cashew kernel, which stood at $4.25 per lb in 2016, is likely to stay unchanged this year provided Raw Cashew Nut (RCN) prices remain steady/lower in the coming months.The average price for 2016 was $4.25 (fob) against $3.50 in 2015 and 2014 and $3.25 in 2013. In fact, the last quarter of the last year witnessed an upsurge in the price from $4.50 to $5 per lb in October and early November to drop to $4.75 by November-end and to $4.50 in mid-December, trade sources in Mumbai said.</p> <p>Demand-supply scenario ,Considering the demand and supply position in the coming months as far as kernels and RCN are concerned, “for most of 2017, the kernel price will be in the $4-4.25 per lb range with a reasonable possibility of a shortlived move below $4 at peak of the 2017 RCN season and a small chance of a move to $4.50, and maybe above, if demand is strong in the first quarter”, Pankaj N Sampat, a Mumbai-based dealer, told BusinessLine.He said major users are well covered for the first quarter, partly covered for the second quarter and sparsely covered for the second half of 2017. Having seen very high prices in the last quarter, they seem to be waiting to see how the prices move in the first quarter before making additional purchases.The recent decline in RCN prices from $2,400 a ton, which was at abnormally higher levels, to $1,900, is not enough to bring down the kernel prices.</p> <p>In fact, to keep the kernel price near the 2016 average of $4.25 per lb, RCN prices need to come down quite a bit. Unless that happens, processors will be reluctant to sell below current levels, especially if they are asked to take large positions for spread shipments, he said.According to Sundaran P, Chairman, Cashew Export Promotion Council of India, high RCN prices and the unattainable Standard Input-Output norms (SION) fixed by the DGFT for the cashew sector have resulted in the continuous decline in cashew exports.Consequently, there has been a substantial increase of 49.36 per cent in the unit value of cashew kernel, which shot up to `632.31 a kg in November from `423.36 in November 2015,If kernel demand picks up in January, its prices will remain steady or even go up a bit. This will mean that RCN prices at the beginning of the 2017 crop will be at around the current levels.</p> <p>According to Pankaj, if kernel demand is subdued in January/February, processors won’t be in a hurry to buy when the 2017 crop arrival begins, and that, in turn, might lower RCN prices.If processors are able to buy RCN at lower levels, they will start offering kernels at lower levels for shipments from March onwards.In the first few weeks of the first half of 2017, if a reasonable volume of kernels is traded, processors may continue to pay high prices for RCN at the beginning of the 2017 crop. In case the RCN prices don’t come down significantly in early 2017, the extent of decline in kernel prices may be restricted, he said.</p> <p>After three years of $3.25 and $3.50 average and one year of $4.25 average, the new “ normal “ will probably be $3.75-4.25 with a comfort zone at around $4/lb in 2017.The average RCN price in 2016 was at around $1,600 a ton against $1,400 in 2015 and $1,100 in 2014.High RCN prices have led to a sharp fall in its import by the Indian processing industry. During the first eight months of 2016-17, total imports fell by 30 per cent to 5,69,304 tons valued at `6,109.19 crore from 8,11,007 tons valued at `6,954.02 crore.The average unit value has increased by 25.61 per cent to `107.31 a kg from ₹85.75 a kg in April-November 2015.</p>