Cashew Kernel Markets in 2016 - INDIA

Bola Rahul KamathBola Surendra Kamath And Sons

18/02/2016

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WHY INDIAN MARKET IS SO IMPORTANT

Cashew WorldMarket share (Aprox)

Second Biggest Producer of RCN 30%

Biggest Importer of RCN 60%

Biggest Processor of RCN 60%Biggest Manufacturer of CK 60%Second Biggest export of CK 22%

Biggest consumer of CK 37%

Fastest growing market ?

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Assumptions and Challenges

• Indian Trade Data is for Financial Year (April/March) • Carry Forward inventory assumed constant, Yield assumed constant at 23%• Cashew Kernel import figures are ignored.

Challenges in Estimationa) Large unorganised sector, so impossible to gather correct data.b) 200000 + cashew farmersc) 3000 + cashew processing units in Indiad) 25000 + cashew traderse) No Reporting authority or Board like Almond Board of California

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Past …. Estimation of Indian Consumption

Quantity in MT

Raw Cashew Nuts Cashew Kernels

Year Indian Crop Import Total Processed Production Export Consumption Absolute CAGR

(1) (2) (3) = (1)+(2)(4) = (3) X

0.23 (5) (6) = (4)-(5) Growth %

2004-05 544000 578884 1122884 258263 126667 131596

2009-10 613000 755959 1368959 314861 117991 196870 65273 11%

2014-15 650000 939912 1589912 365680 118952 246728 49858 6%

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Past ….Cashew Consumption Vs Other Dry Fruits

CASHEW KERNELS ALMONDS PISTACHIOS

Year Consumption Absolute CAGR Import Absolute CAGR Import Absolute CAGR

Growth % Growth % Growth %

2004-05 131596 21087 4972

2009-10 196870 65273 11% 49330 28243 24% 9198 4226 17%

2014-15 248316 51446 6% 65385 16055 7% 10813 1615 4%

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Cashew Kernel Price Chart

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

0

100

200

300

400

500

600

Cashew Kernel Price (Rs / Kg)Year

C K Price (Rs/kg)

2004-05 2142005-06 2202006-07 2072007-08 2002008-09 2732009-10 2692010-11 2672011-12 3352012-13 4042013-14 4412014-15 4602015-16 509

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Analysis .. Why Indian Market is slowing Down

• Have prices gone up too fast ? • Prices in USD has gone up + Indian Rupee has weakened• We are using average export realization in rupees as

benchmark to compare prices. But, India uses more of broken grades and its prices have gone up more sharply

• Indian Inflation is near to zero, Nut prices going up at 10% per annum

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Present …… Estimations for 2015-16Qty in MT

April/Jan April/Jan

2014-15 2015-16 Change

Domestic RCN Production 650000 675000 4%

Import of RCN 834139 881307 6%

Total RCN for processing 1484139 1556307 5%

Estimated RCN Inventory in hand 150000 170000 13%

RCN Processed 1334139 1386307 4%

CK Output at 23% 306852 318851 4%

Export of Cashew Kernels 100208 84424 -16%

Supply of CK into Indian market 206644 234427 13%

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Future … Looking into 2016.. Reasons for worry

• Cashew Kernel Export price has touched Rs 532/Kg in Dec 2015 compared to Rs 473/Kg in Dec 2014. (Up 12%)

• Almond, Pistachios, Raisin prices have collapsed in last 4 months.. But cashew prices are still going up

• After a long gap, Almonds have become cheaper than cashews

• Dry fruit traders lost plenty of money • Changes in taxation system like GST can increase cashew

prices, further effecting consumption.

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Future … Looking into 2016.. Reason for Worry

• Fall in Commodity prices / share markets is reducing the cash flow with consumers.

• Banks have become extremely cautious in lending due to increased NPA.

• Working capital required for cashew industry has gone up 50% in last two years.

• Food Safety Authorities have become more vigilant

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Future … Looking Beyond 2016 .. Long Term

• India is the fastest growing big economy in the world. • India will be worlds’ third largest economy by 2025• Indians love cashews in everything they eat, be it biscuit,

sweets, dishes or chocolate• Cashews/dryfruits as gifts will never go out of fashion• Now Indians believe cashews are their local product!

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Conclusions

• Year 2016 will be extremely challenging.• Whether Cashew Prices need a correction ? Its

question of time• Thank you and All the Best.