Cashew businesses worry about high price trap in 2018

Although global cashew demand is predicted to continue rising, the Vietnam Cashew Association (Vinacas) and cashew processors and exporters are worrying about a high price trap which may affect their activities in 2018.

A cashew processing factory

Vinacas Chairman Nguyen Duc Thanh said the association is concerned about unpredictable prices as cashew nut export prices may fall sharply after they already hit record last year. Meanwhile, raw cashew prices are still high at present.

Cashew nut export prices averaged 10,000 USD per tonne in 2017, rising by over 20 percent from the previous year. They have declined by 10 percent after reaching their peak last June.

Some businesses said with current export prices, raw material prices should be lower than 1,900 – 1,950 USD per tonne so that production and business activities are profitable. 

However, raw cashew prices in the global market are currently about 2,100 – 2,150 USD per tonne. Producers will suffer losses if they buy materials in bulk at present.

Thanh said businesses should be alert for a high price trap since they might purchase raw materials at very high prices but sell cashew nuts at lower prices. A similar situation happed in 2000. Therefore, companies should balance raw material and processed nut prices to ensure profit.

Many insiders also forecast 2018 would be a bad year for cashew processing and export.

Ta Quang Huyen, Chairman of the Hoang Son 1 Co. Ltd, said that on January 1, many foreign supermarkets increased the prices of cashew nut products by 15 percent from 2017.

He said if selling prices are too high, consumers will gradually switch to other types of dried nuts. The price hike could slow cashew nut consumption, especially in the last six months of this year.

Facing unpredictable prices, Vinacas and cashew businesses decided to reduce cashew nut output and export revenue in 2018 so as to improve quality and expand the domestic market. 

They will reduce the processing output from 350,000 tonnes in 2017 to 300,000 tonnes in 2018 and the cashew nut export turnover from 3.5 billion USD to 3 billion USD this year.

According to the Ministry of Agriculture and Rural Development, Vietnam earned 3.52 billion USD from shipping 353,000 tonnes of cashew nuts abroad in 2017, up 23.8 percent in value and 1.9 percent in volume from the previous year. The country made up over 50 percent of total global cashew nut export value in 2017 and remained the world’s top processor and exporter of this product.