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Cashew Ban - A Case of Force Majeure?
Given the current market turbulence in cashew nuts, which will continue to accompany us for the rest of the year, we appeal to all market participants to take their measures with a sense of proportion for their actions' current and long-term effects.
Cashews are an attractive product in a growing market. They are very popular with consumers whether as a single item or in blends. This will likely remain the case, even if low harvest volumes and the resulting political measures restrict availability and drive up market prices.
The majority of raw African cashew nuts are shipped to Vietnam or India to be cracked and processed there, and the European market is largely supplied from there. The Ivory Coast is currently the largest single country for the agricultural production of raw cashew nuts, accounting for around a quarter of global production. According to the Conseilleur Commercial of the Ivory Coast Embassy in Germany, the processing rate of cashew nuts in the country is currently around 20% and is set to increase to 50% over the next few years.
Due to the export ban, Côte d'Ivoire's exporters are currently unable to fulfil their delivery obligations. As a result, there is a shortage of raw cashew nuts for further processing, particularly in Vietnam. It is foreseeable that many contracts in the supply chain up to retail will not be able to be fulfilled. Prices are very volatile and even if contracts are concluded, it cannot be assumed that goods will be received or that they will be received at the agreed price, as these quantities are simply not available on the global market.
In view of the current market turbulence in cashew nuts, it is therefore important for all market participants to take measures with a sense of proportion for the current and long-term effects of their actions.
Cashews are an attractive product in a growing market. They are very popular with consumers whether as a single item or in blends. This will likely remain the case, even if low harvest volumes and the resulting political measures restrict availability and drive up market prices.
The majority of raw African cashew nuts are shipped to Vietnam or India to be cracked and processed there, and the European market is largely supplied from there. The Ivory Coast is currently the largest single country for the agricultural production of raw cashew nuts, accounting for around a quarter of global production. According to the Conseilleur Commercial of the Ivory Coast Embassy in Germany, the processing rate of cashew nuts in the country is currently around 20% and is set to increase to 50% over the next few years.
Ban on cashew exports
Due to the significantly lower harvest volumes this year, the Ivory Coast government imposed an export ban on raw cashew nuts in early summer 2024 in order to protect the emerging cashew nut industry in its own country. The export ban has since been briefly relaxed. It is now reported that the export ban may be maintained until December 2024. The export ban only applies to raw cashew nuts; shelled nut kernels will continue to be exported.Due to the export ban, Côte d'Ivoire's exporters are currently unable to fulfil their delivery obligations. As a result, there is a shortage of raw cashew nuts for further processing, particularly in Vietnam. It is foreseeable that many contracts in the supply chain up to retail will not be able to be fulfilled. Prices are very volatile and even if contracts are concluded, it cannot be assumed that goods will be received or that they will be received at the agreed price, as these quantities are simply not available on the global market.
In view of the current market turbulence in cashew nuts, it is therefore important for all market participants to take measures with a sense of proportion for the current and long-term effects of their actions.
Force majeure?
There have been various discussions as to whether force majeure can be invoked in the current situation to invalidate contractual obligations. As long as cashews are still on the market, the applicability of force majeure is only likely to apply in very, very specific contractual constellations. As long as cashews are available on the world market, force majeure is not applicable.![cmb logo](/img/logo64.png)