In the Cashew Market – 2020 Outlook report at the beginning of the year, we spoke about the “Googly” (cf. cricket) thrown at the cashew market in 2019 by Tanzania (holding back the 2018 crop). Now, half way through 2020, talk of the town is the “Chinaman” (again cf. cricket) thrown at the world by China. This is probably the blackest Black Swan event we have seen in our lifetime, according to Pankaj Sampat of Samsons Traders. By early 2020, it seemed that the oversupply of 2019 was being used up with the 2018 & 2019 Tanzania crops moving to Vietnam & India from Sep 2019 to Jan 2020. Outlook was good for 2020 Northern crops (Asia & West Africa) which are over 75% of World Production. Prices started easing a bit in Feb and crashed in Mar due to the uncertainty caused by Covid. During April 2020, prices recovered a bit on the back of a spurt of buying following bigger than normal retail off-take in USA and Europe. During May + June 2020, prices have eased a bit – current levels from Vietnam are W240 from 3.30 to 3.40 and W320 from 2.60 to 2.80 FOB. Demand and prices for brokens are very low – WS from 1.40 to 1.60 and LP from 1.00 to 1.10 FOB. Vietnam amd Cambodia (both very little affected by Covid) harvested good 2020 crops – combined, the quantity collected is reported to be in 700-750K (the largest ever). Collections in India & West Africa have been adversely affected – India more than West Africa. Movement of RCN from Africa to Asia has been slow. Inadequate post-harvest care in Africa and later shipments will mean reduced kernel yields when RCN arrive in India and Vietnam. Processing in Vietnam in the first half was higher with the huge Vietnam and Cambodia crops coupled with very few Covid related restrictions resulting in record kernel shipments. Processing in India was near zero for six weeks (SH Mar + Apr) and about 50% during May + Jun due to the restrictions plus lack of labour. Consumption in India in Q2 of 2020 was severely adversely affected. Even in a normal year, it is difficult to make projections about supply & demand for cashew which has a very fragmented supply chain – collected by several hundred thousands in over 20 countries with over 50% of World Production moving almost 10,000 km from Africa to Asia for processing by several hundred processors and then moving another 10-15,000 km from Asia to the EU and USA for consumption. Covid-19 adds confusion to an already complex situation. There are so many moving parts that it is impossible to judge which way each part will move and what impact it will have on other parts. Here is some food for thought: It is quite possible that kernel availability in 2020 might be lower than 2019 due to lower RCN collection in India & Africa coupled with lower kernel yields from African RCN. Indian consumption in HORECA segment has been severely impacted leading to unprecedented crash in prices of brokens. At the same time, break and reduction in processing = approx. 300K of RCN = approx. 65K of kernels lower. There was significant jump in retail sales in USA & EU in Mar Apr – a fair amount of it was probably due to buying more than usual to stock up. But many people say that snacking increases in difficult times – it is to be seen whether this translates to more consumption of nuts (esp Cashews) in coming months. If Indian situation improves in the next 6-8 weeks, we could see a quick and significant revival of demand due to the lower prices. If that happens, there could be a squeeze in kernel availability in India during some weeks of the peak consumption period which starts in Aug. Although it may not have direct impact on global prices considering that Indian exports are less than 15% of World Kernel exports, it will certainly have positive sentimental effect on the market (including, maybe, higher RCN prices). Current prices are about 25% lower than beginning of the year… and the lowest since mid 2009 (and Q1 of 2010). For the foreseeable future, the downside seems to be limited. At the same time, there is nothing on the horizon pointing to a big jump. But, there seem to be reasonable chances of gradual increase in demand (and prices) by Sep Oct, especially if things start moving towards normal by then. Overall a very fluid situation which makes even medium term planning difficult - swimming with the tide to keep head above water seems to be the best advice (and it would be a good idea to be covered for rest of the year and reasonable portion of needs for Q1/2021).