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Vinacas urges cashew exporters to be more cautious over futures contracts

Ngoc Hung
Monday,  Jul 17,2017,19:34 (GMT+7)
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Vinacas urges cashew exporters to be more cautious over futures contracts

Ngoc Hung

HCMC – The Vietnam Cashew Association (Vinacas) has just advised local processors not to sign multiple futures cashew nut export agreements to avoid defaults and damages due to insufficient inventories.

At a review conference last week, Vinacas pointed out advantages and disadvantages of the domestic cashew sector in the January-June period, and unveiled its production and business plan for the rest of the year.

Vinacas warned local exporters not to ink so many futures cashew nut agreements in case their inventories are in short supply, especially contracts with long deliveries. The move is to enable them to be more proactive in price negotiations in the months to come.

The association ascribed unfavorable weather conditions and diseases in many farms nationwide to the dwindling raw cashew supply.

Vinacas forecast the total volume of local raw cashew would reach around 252,000 tons this year at best, down 52,000 tons against the previous year.

Consequently, local processors had to purchase raw cashew from abroad in a bid to fulfill their contracts.

Data of the Ministry of Agriculture and Rural Development shows Vietnam imported 665,000 tons of raw cashew worth US$1.28 billion in the six-month period, up 65% in volume and up two times in value compared to the same period last year.

Besides, 149,000 tons of cashew nut was shipped abroad with a total value of US$1.5 billion during the same period, down over 4% in volume but up roughly 21% in value.

The average export price of the commodity in January-May rose by 25% year-on-year to more than US$9,500 a ton.

Meanwhile, a kilo of raw cashew was locally priced at a record high of VND50,000 (around US$2.2), a steep rise of 32% over the year-ago period.

Therefore, having taken both domestic and international factors into account, Vinacas adjusted this year’s export volume of cashew nut to 320,000 tons from the previous plan of 360,000 tons.

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