Cashew industry expects another tough year amid global demand slump, high raw material prices
Cashew industry expects another tough year amid global demand slump, high raw material prices
Last year was a challenging one for the cashew industry, with exports falling from the previous year, but 2023 might be even worse, according to the Viet Nam Cashew Association (VINACAS).
Exports were worth US$3.07 billion against the target of $3.2 billion, a $600-million reduction from the initial target, Bach Khanh Nhat, the association’s deputy chairman, said.
Thus, 2022 marked the end of a decade during which exports rose steadily, he told a review meeting held in HCM City late last week.
According to the association, there were a number of reasons for exports to fall.
The price of raw cashew stayed very high and processing costs were also high, but export prices were low, meaning exporters were reluctant, it said.
China, one of Viet Nam’s major cashew markets, last year maintained a zero COVID policy, making it difficult to ship to the market, it said.
Nguyen Minh Hoa, the association’s deputy chairman, said the energy and food crisis has driven up inflation around the world, affecting consumer spending.
“So people spent more money on essential needs, and reduced spending on discretionary items such as cashew nuts. The situation is expected to continue this year, cashew demand will be low and it will be difficult for prices to increase.”
According to the VINACAS Information Council, in 2023 cashew production and supply chains will continue to face challenges due to factors such as the Russia-Ukraine conflict, inflation and recession, the State Bank of Vietnam’s credit tightening, USD/VND exchange rate volatility, decline in demand, and increase in processing costs.
So, after careful consideration, VINACAS’ executive board has set a modest export target for 2023 of $3.1 billion.
Delay import of raw cashew
Hoa said the number of new export orders signed for this year has fallen to a one-tenth of the normal.
“Usually, at the beginning of the year, businesses signed contracts for at least until the third quarter. But this year most importers in the US and EU do not plan to import cashew until the end of the second quarter.”
Amid lower demand and export prices, the association and businesses at the meeting said there should be no rush to import raw cashew, whose prices remain high.
Hoa said last year exports of W320 grade cashew nut (the highest grade based on shape and colour) fetched $2.95-3.1 per pound while raw nuts were priced at $1,200 per tonne.
Now W320 cashew prices have fallen to $2.5-2.6, but Ivory Coast still sells raw cashew at $1,200, even $1,240, he said.
Firms need to carefully study the market and draft appropriate plans for imports, he added.
Last year Viet Nam imported 1.9 million tonnes of raw cashew, slightly lower than in 2021.
