Rising Prices of Cashew Nuts and Almonds Present Challenges for Exporters
An Overview of the Market
The prices of cashew nuts and almonds have seen a significant surge in recent months, impacting both domestic consumers and international markets. This trend is expected to continue, with dry fruit importers in Delhi indicating a possible further increase of 5 to 10 percent by Diwali.The rise in prices is largely attributed to a combination of factors, including inadequate domestic production, increased consumption, and the rising value of the US dollar against the Indian rupee, which makes imports more expensive.
Supply and Demand Trends
India, the largest consumer of cashew nuts globally, relies heavily on imports to meet domestic demand. Despite being the second-largest producer and exporter of cashews, India imports over 50 percent of its cashew nuts to fulfill local consumption needs. This dependency on imports has been exacerbated by a decline in cashew imports by 35 percent between April and July.The reduced supply has put upward pressure on prices, which have already increased by 80 percent in the last four months. Almond prices have also risen by 15 percent during the same period, influenced by the overall trend in the dry fruit market.
Impact of the Rising US Dollar
One critical factor contributing to the increased cost of cashew nuts and almonds is the strengthening of the US dollar against the Indian rupee. As the dollar becomes more expensive, the cost of importing these nuts rises, leading to higher prices in the domestic market. This has made it challenging for traders and importers to maintain stable pricing, further contributing to the volatility in the market. The consumption of dry fruits, particularly cashew nuts, has seen a steady increase in India.Approximately 60 percent of cashews are used in food items such as sweets, snacks, and curries. Cashew pieces, which are cheaper than whole cashews, are predominantly used in these products. The rise in cashew prices has also led to a shift in consumer preferences, with some of the demand for cashews being replaced by almonds. Despite a 20 percent increase in almond imports, almond prices have still risen by 15-20 percent. This shift highlights the interconnectedness of the dry fruit market and the impact of price fluctuations on consumer behavior.
Challenges in the Global Supply Chain
The global supply chain for cashew nuts has faced significant challenges this year, particularly due to export bans imposed by major African cashew-producing countries. These bans have further reduced the availability of raw cashew nuts, contributing to the price increases. According to the President of the All India Cashew Association, the current prices are slightly below their historical highs. Still, they are expected to rise further by October due to ongoing supply constraints.The sharp rise in cashew nut and almond prices presents a complex challenge for exporters and importers alike. With domestic production unable to keep pace with rising consumption and global supply chains facing disruptions, the market is likely to remain volatile in the near future. The anticipated increase in prices by Diwali further highlights the need for careful planning and resource management in the dry fruit industry.