Vietnam’s Cashew Kernel Exports Soar, Boosted by Record Low Prices

Vietnam exported 59,947 metric tons (mt) of cashew kernels in June, the second-highest monthly exports, beaten only by the 62,515 mt shipped in Jun-21. Exports were boosted by low prices, which have fallen to the lowest in recent history. As tracked by the Vietnam Cashew Association (VINACAS), the free on board (FOB) price of WW320 cashew kernels fell to only USD 2.74/lb in May - the lowest price since VINACAS started reporting prices in 2016.

Source: VINACAS

While the strong exports in June are a very positive signal for the industry, plagued by an oversupply of cashews, consumer demand suggests a less optimistic outlook. Global cashew production has remained around 4.5 million metric tons (mmt) for the past three years, including the estimated figure for 2023. With the slump in consumption in 2022, due to higher living costs and end consumers opting for less expensive snacks, global cashew inventories are ample. The strong exports are more a result of importers that are bargain hunting, topping up inventories at these meager prices than an indication of a significant recovery in end consumption. However, cashews, usually a more expensive and luxurious nut, have become more competitive with more affordable nuts like almonds and walnuts, leading to a substitution effect, mostly evident in Asia and the Middle East.

Export Destinations

The United States (US) is traditionally the largest importer of cashew kernels. Over the first six months of 2023, Vietnam’s exports to the US were 60,218 mt, a 5% decrease YoY. It is much more difficult for cashews to compete in the lower-priced nut categories in the US, as the country is a major almond, walnut, pistachio, and pecan producer and exporter. Cashew nuts retail for around USD20/kg in US supermarkets, compared to almonds at about only USD10/kg, and walnuts and pistachios at around USD15/kg. Consumers opt for cheaper nuts, with expensive cashews falling out of favor. All other regions have shown an increase in imports from Vietnam due to a combination of importers making use of low prices and end consumers willing to pay a slight premium for cashews in order to get a more luxurious snack. In Germany, for example, cashew nuts retail for around EUR 22/kg, compared to EUR 18/kg for almonds, EUR 14/kg for walnuts, and EUR 23/kg for pistachios.

It should be noted that the cheap FOB prices offered in Vietnam are not reflected in the retail price of cashews. Retail cashew nut prices in major US and Europe supermarkets are similar or slightly higher than a year ago. Chinese imports have also shown a recovery, albeit slow. Import from Vietnam in the first six months of 2023 totaled 23,780 mt, compared to 19,439 mt over the same period in 2022. As covered in a previous Tridge analysis, the Middle East Remains Growing Market for Cashews Amidst Global Demand Slump. Exports to destinations reported as “Unknown” increased to 21,901 mt in the first six months of 2023 from 10,462 mt in the first six months of 2022.

Source: VINACAS

During the latter half of the year, it is typical for Vietnam's exports to decrease while prices experience a slight increase. As most major cashew-producing countries in the Northern Hemisphere have already completed their harvests, this alleviates some of the downward pressure on prices. The months ahead will offer insights into whether there is a potential recovery in end consumer demand. This will be particularly evident if Vietnam's exports continue expanding, with prices also increasing. However, it is more probable that Vietnam's exports will decrease again due to importers having already replenished their inventories, while retail demand is recovering at a slower pace, insufficient to rebalance the supply and demand dynamics.