<p>Spend Matters welcomes this guest post from Jara Zicha and Jonathan Stokes, of Mintec.Cashew nuts have become increasingly popular in the last few years, eaten either as a snack or with your morning muesli, made into a protein bar or even into lactose-free milk.</p> <p>A few years back, cashews were very competitively priced, being one of the cheapest tree nuts available on the market. However, prices have soared since the beginning of 2016, currently up 30% year-over-year, at over $11 per kilogram in Vietnam.</p> <p><img src="https://dwfoh96rza0z7.cloudfront.net/wp/wp-content/uploads/2017/07/10130529/cashews.jpg" style="height:341px; width:535px" /></p> <p>Whilst Vietnam isn’t the largest producer of cashews, it is the largest processor, accounting for more than half of all global cashew exports and the main supplier for the U.S. market. Following disruptions to supplies during 2016, Vietnam struggled to process enough cashews to placate high global demand and prices started climbing as a result.In 2016, domestic Vietnamese production was hit heavily by inclement weather, which reduced yields and quality of the crop. Buyers put off by high pricing decided to fill their stocks for immediate needs and wait for the next crop in the first half 2017, hoping to “cashew” in on falling prices.</p> <p>However, prices have been rising further in 2017. Heavy rains during the growing season in Vietnam between January and March adversely impacted flowering and further development of nuts. Output for 2017 is estimated to fall around 18% compared with last year, with some provinces reporting a decline in production of up to 50%.The crop in West Africa has been also revised lower from earlier estimates, although at reasonable levels, but quality has been reported lower this year. West Africa exports as much as 70% of its production to Vietnam for processing, and nuts this year have been affected by heavy winds during the flowering stage.</p> <p>Cashew exports from Vietnam are estimated to have fallen during the first five months of 2017, down 10% y-o-y, while global prices are likely to remain firm for the time being. Demand is expected to soften as buyers could resist the current price levels. However, processors in Vietnam who have already purchased their stocks of raw cashews from Africa or India at high costs are unlikely to back away from their price demands.</p>