May Cashew Update: Painfully Slow Increase in Ivory Coast's Kernel Exports, Cambodia's Exports Indicate Lower Crop, US Cashew Demand Lose Momentum
Cambodia’s cashew exports to Vietnam dropped steeply in March, which could indicate a lower than expected crop. Cambodia exported 204,771 mt of RCN to Vietnam in April, down from 267,727 mt in March. Late rains during the harvest reportedly reduced the quality and volume of Cambodia’s crop.
Cashew imports from the US have been exceptionally strong throughout 2021 but dropped steeply in the first two months of 2022. The steep drop can be attributed to various factors, including large inventories and logistic disruptions from source countries. Rising inflation could further decrease demand for luxury snacks, like nuts. Based on retail prices of nuts as snacks, cashews are more expensive, and prices are increasing faster, than almonds and pistachios.
Painfully Slow Increase in Ivory Coast's Kernel Exports
Ivory Coast is the world’s largest cashew producer, yet almost 90% of its cashews get exported as raw cashew nuts (RCN) to Vietnam and India, where it is deshelled and processed further and then exported as cashew kernels. There have been several attempts to boost the processing of cashews domestically by both government and private companies, however for the most part progress has been painfully slow. The good news is that Ivory Coast’s market share in the top 3 cashew kernel importing countries has more or less tripled over the last 2 years, the bad news is it came from a very low base. In the first quarter of 2020, Ivory Coast had a market share of only 0.7%, 0.1%, and 1.5% in cashew kernel imports by the US, Germany, and the Netherlands respectively. In the last quarter of 2021, its market share was 2.7%, 4.2%, and 3.8% for the US, Germany, and the Netherlands respectively. Ivory Coast had an 8% market share in Germany’s cashew imports in February 2022.
In April, 9 Ivory Coast cashew processing plants received American Food Safety Modernization Act (FSMA) certification, and 10 more applications are under review. This could open the door for many more cashew kernel exports from Ivory Coast to the US.
Ivory Coast’s government aims to process half of the country's cashews domestically by 2025 or 2026, but currently only an estimated 10-12% of cashews are processed locally. However, the government recently dished out a USD 20 million package aimed at saving the local processing industry from bankruptcy. Only four out of the 20 processing plants in Ivory Coast were operating earlier this year, with the others closing due to financial problems, according to Reuters.
Foreign aid and investment have also been streaming into Ivory Coasts' cashew processing industry. The US launched a USD 61 million investment in cashew processing in West Africa, the focus being on Ivory Coast. The US the world’s largest importer of cashews and could benefit if it can import directly from origin countries. The Norwegian Investment Fund for developing countries, Norfund, backed a USD 10 million project to build a cashew processing plant in Ivory Coast’s Abidjan. The Netherlands’ Centre for the Promotion of Imports from developing countries (CBI) is providing support through training for processors and exporters planning to export to Europe.
Cambodia's Exports Drops Steeply
Cambodia’s RCN exports to Vietnam are being closely watched to get an indication of the size of its crop in 2022. Cambodia exports virtually its whole crop as RCN to Vietnam and thus the monthly import figures reported by the Vietnam Cashew Association (VINACAS) are the best indicator of the size of the Cambodian crop. Cambodia exported 204,771 mt of RCN to Vietnam in April, down from 267,727 mt in March. For the first four months of 2022, Cambodia already exported 506,378 mt to Vietnam. Based on the historical export trend total exports for 2022 could be 675-700,000 mt, which will give a fairly accurate estimate of production. This is lower than anterior expectations. Continued late rains during the harvest in Cambodia reportedly reduced the volume and quality of the crop. There is still a lot of mystery surrounding the 2021 crop, and crop estimates still vary widely for both 2021 and 2022.
US Cashew Demand Lose Momentum
Like almonds and pistachios, cashew nuts gained massive popularity in the US during the pandemic. The US is the world’s largest importer of shelled cashew nuts and in 2021 imported 182,924 mt, the largest annual imports on record. However, the first two months of 2022 have seen cashew imports drop by 5% YoY. Cashew imports normally decrease from January to March, but it was a steep drop considering the upward momentum of cashew imports throughout 2021.
There are several reasons for the drop, one of them being that it came from a very high level. Due to the comparatively low prices during 2021, traders stocked up and might have enough cashews available for the short term. Another reason is that shipment delays are also influencing cashew exports with disruptions in South East Asia intensifying. US imports from India dropped steeply, from 344,795 mt in December, to 231,109 mt in January, to only 51,983 mt in February. Yet another reason could be the impact of inflation. Retail prices of cashews in the US increased by 10% since January, based on prices in Walmart’s Sacramento Supercenter Outlet. In January 16oz of Great Value: Deluxe Whole Cashews sold for USD 8.58, which increased to USD 9.46 for the same product in May. This retail price increase is much higher than that of almonds, which didn’t change, and pistachios which only increased by 2%. As US households are tightening their budgets amid inflation, luxury snacks, like nuts could drop off their shopping lists. Cashews, already costing more than almonds and pistachios, could be one of the first to go.
