Record Low Cashew Export Prices Not Reflected in Retail Prices. Weak Consumer Demand Could Continue in 2023

Cashew Nut Kernel

United States

Published Jan 5, 2023

Cashew prices, FOB Vietnam, were at their lowest in recent history throughout 2022. Prices were pinned down by weak retail demand. However, end consumers are still paying up to 10% more to snack on their favorite nut than in January 2022, despite export prices from Vietnam decreasing by 7% from January. The weak economic outlook that led to decreased nut consumption, could worsen in 2023, according to the IMF. Furthermore, retail prices haven't shown any indication of decreasing. This could result in continued weak demand from the snack market, and 2023 could be another year where production outpaces consumption

With the rapid increase in living costs and rampant inflation in 2022 consumers opted for cheaper alternatives to nuts. Cashews, being a comparatively expensive nut, were one of the hardest hit by the change in consumer behavior. This pushed cashew prices down to the lowest levels in at least a decade. Cashew kernel prices (WW320) as tracked by the Vietnam Cashew Association (VINACAS) averaged only USD 3.12/lb for the first 11 months of 2022, compared to an average of USD3.25/lb throughout 2021. From January to November, FOB prices in Vietnam decreased by 7%, from USD 3.29/lb to USD 3.06/lb. However, this has not translated into savings for end consumers. In fact, retail prices in the US, the largest cashew kernel importer, increased by 10% from January to May, and were still at these levels at the time of writing, early in 2023. Walmart’s Deluxe Whole Cashews retailed at USD 8.58/16 oz in January, increased to USD 9.46/16 oz in May, and in January 2023 were still at the same price.

This has left the cashew industry in a paradoxical situation. Weaker consumer demand pushed farmgate, import, and export prices lower, but not retail prices. Lower retail prices could increase demand, yet retail prices have not decreased in unison with export prices. The retail price hike in Q2 2022 was attributed to higher input costs, especially in terms of freight, energy, and packaging materials. However, at the end of 2022, freight and packaging costs were much lower than at the start of the year, and yet, in the US and most European countries, the retail price of cashews did not decrease.

It should also be noted that there is clear evidence that lower retail prices can increase consumer demand even amidst economic uncertainty, judging by the situation in India. India’s raw cashew nut imports increased by 68% YoY to 1.29 million mt over the first 10 months of 2022. This is in stark contrast to the US and Europe, where retail prices increased and imports decreased. The US imported 15-20% fewer cashews in 2022 than in 2021. Europe’s imports from Vietnam and India were 16% lower YoY for the first 11 months of 2022.

This makes for a grim outlook in 2023. Weak demand resulted from economic uncertainty in 2022, which forced many households to abandon their emphasis on healthy snacking and nut consumption. This was exacerbated by the aforementioned increases in retail prices. Even though living costs have declined somewhat over the last 6 months, economic uncertainty is here to stay. In a recent CBS interview, IMF Director Kristalina Georgieva warned that 2023 could be “a tough year, tougher than the year we leave behind”, and that the US, EU, and China’s economies are slowing down. These are coincidently 3 of the 4 largest cashew-consuming regions, the other being India. Furthermore, large retail companies are often slow to reduce prices, judging by historical trends, so there is little hope that a retail price decrease will revitalize consumer demand.