2021 Ends with more Questions than Answers in the Cashew Market
Cambodia’s Bizarre 2021 season
Cambodia cashew production was less than 100,000 mt of raw cashew nuts just 5 years ago and around 200,000 mt in 2020. Official production figures are seldom available, and production estimates often vary greatly. However, while production estimates before 2021 might have some variation, the real question hangs over the explosion in the 2021 season.
While nearly no one expected it, when Vietnam reported unbelievable increases in imports from Cambodia throughout 2021, it became clear production must have skyrocketed. Imports reported by Vietnam customs already surpassed 800,000 mt in the first 4 months of 2021.
In September an article published in the Khmer Times stated the Ministry of Agriculture, Forestry, and Fisheries announced cashew production in 2021 was 876,521 mt, “an increase of 340.61 percent”. While unexpected, these numbers did add up, since a 340.61% increase would mean the previous year’s production was 198,934 mt, well within most estimates for 2020.
However, even this nearly 4 fold increase in production still doesn’t explain the incredible increase in exports to Vietnam. According to the Vietnam Cashew Association’s (VINACAS) figures for 2021, Vietnam imported 1,108,443.46 mt of raw cashew nuts from Cambodia for the year. This is more than 220,000 mt higher than Cambodia’s production, and also does not even include Cambodia’s exports to other countries. Unless Cambodia had more than 220,000 mt of inventory left from previous seasons, this makes little sense. Cashew nuts have a long shelf life when dried, but it would mean that some of these cashews exported to Vietnam were older than 5 years, based on production and export data from previous seasons.
Sources: MAFF press release, Khmer Times, VINACAS, ITC Trade Map, International nut and dried fruit council
Plans to increase Cambodia’s cashew production, in a joint effort by the Cambodian government and VINACAS was announced in 2017. However, after the announcement of the project, it faded into the background and there were few expectations that production would quadruple in just 3 to 4 years. Especially given that it could take cashews 3 to 4 years to bear nuts. Normally production increases in the nut industry are gradual, but this dropped like a bomb on the industry. That being said, production might still be on the increase as these trees mature and give even higher yields. Production might top 1 million mt in 2022 which will mean Cambodia should surpass Ivory Coast to become the world’s largest producer.
This collaborative project was mentioned again by Vietnam’s Ministry of Agriculture and Rural Development press release at the end of 2021, stating that the goal is to increase Cambodia’s production to more than 1 million mt in the shortest amount of time possible.
The main harvest in Cambodia starts from January and lasts until May, so there will be more clarity on the size of the 2022 harvest in the next few months.
Vietnam’s large carryover
Vietnam has cemented itself as the processing hub for most of Africa and South East Asia’s cashew nuts. In 2021, Vietnam imported a record 3,149,865 mt of raw cashew nuts in 2021. Exports were also a record at 609,260 mt on a kernel basis. The conversion factor from RCN to kernel basis is normally between 25% to 20%. The starting inventory of 2021 is not known and neither is domestic consumption, but when calculating imports, production, and exports on a kernel basis, it shows that at the end of December, Vietnam’s cashew inventories were still healthy.
Sources: VINACAS, INC
Increased world production
The harvest in western Africa kicked off recently. While it is still early, producers in Ivory Coast and Ghana are reportedly happy with this season’s yields. Most of these nuts will again go to Vietnam to be processed. Many of the already top producing countries are increasing production. World production in 2021 might have already topped 4 million mt, and is almost certain to increase further in 2022. Prices were moving sideways at the end of 2021. Prices are underpinned by increased demand for commodities worldwide. But taking into consideration harvest pressure coming from western Africa, large inventory in Vietnam, Cambodia’s possible more than 1 million mt coming to the market in the next 5 months, most pressure on prices will be to the downside.
WW320 indicates whole white cashew nuts, with 300 to 320 cashew nuts per pound
Source: VINACAS
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