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Indian cashew demand hit on lower buying from China and West Asia

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KOLKATA, India, Sept. 3 (Xinhua) -- Cashew nut consumption has taken a major hit due to lower than estimated buying from China and West Asia, a dry fruit trader said Monday.

While the Western market has been consuming lower than the normal level for the past three years due to economic compulsions, the lower demand from South-East Asia and West Asia has upset the trade dynamics.

Pratap Nair of Vijayalakshmi Cashews, one of the oldest and largest cashew-exporting business, said,"Political tensions in the Middle East (West Asia) is major cause for the decline. Iran was a major consumer of nuts and so was Syria. Demand from China and India has also been lower than estimated. These new markets were helping the cashew industry grow when demand from the traditional markets declined."

India is the world's largest consumer of cashew nuts with trade estimates of consumption ranging from 170,000 to 190,000 tonne. It is also one of the largest processor and exporter of kernels.

Cashew lost significant market share in 2011 due to high prices and reduced availability. Prices of W 320 grade touched 4.50 U.S. dollars per pound in 2011 but have declined to 3.20 to 3.30 U.S. dollars. Consumption of snack nuts actually fell by 11 percent in U.S. during 2011 as against the annual growth of 2 to3 percent. "Buyers in the main importing regions of U.S. and Europe are picking up any offers they see at the lower end of the current range. They do not seem to be willing to pay the 10to15 cents premium that shellers are asking for the forwards. This situation is likely to continue until there is some contracting with retailers," Pankaj Sampat of Samsons Trading said.

He pointed out: "In normal times, some people would be willing to take forward positions but the precarious global economic situation is making things difficult. Buyers do not want to pay premium for securing volume, as they do not know what they will be able to sell. Sellers do not want to sell forwards at lower end of the range because it is below cost and they do not see any prospect of decline in raw cashew."Pratap Nair felt the market would stabilise at the current level as it had already bottomed out. "Indian festival demand and Chinese demand would help the market steady. Big retailers in U.S. and Europe also buy forward in September for the year-end consumption," he added.

Sampat said, "In the next few weeks, we will know the trend of Asian demand for the last quarter and we will probably get some idea of U.S. and E.U. demand for the first half of next year. If activity picks up in this period, we could see the prices inch up a bit."

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