All West African (and India and Vietnam) crops are harvested and in the market.
Nearly all RCN afloat from West Africa are ready for shipment, on route to Asia or already in the port of destination. We get reports from Vietnam that the quality of the RCN stock in the port of Vietnam is not good and will result in higher processing costs. A significant part of the RCN stock is in hands of Chinese traders who are/were speculating on the RCN prices but lacking the knowledge on quality controls on RCN. Besides the quality, finance remains an issue, especially for smaller processors in Vietnam who do not have the finance to buy RCN prior to selling some kernels first. This causes some slightly discounted kernel containers in the market every now and again.
Larger processors carry limited stocks, most of them for production till maximum end September. All processors expect higher prices from that time frame.
The expectation is that smaller (but also some larger) factories will either close doors or keep buying small parcels for processing. Since the quality of RCN arrivals is lower, RCN prices may expect to decrease slightly to reflect the lower quality.
Import volumes of RCN into Vietnam are up by 69% till date.
Export volumes from Vietnam for kernels for this year (Jan-June) are down by 4%.
The higher imported volume RCN could be seen as a strong sign/confirmation for larger volume available in Vietnam, and hence a strong potential for lower prices in the coming months.
But it may partly be explained by lower RCN crops in Vietnam and Cambodia combined, and the kernel output is estimated to be lower from a lot of imported RCN and also locally grown RCN were of lower general quality.
Also, the pattern of imports is different from previous seasons due to different shipment months from both East and West Africa.
Only at the end of the import season, the final totals can give more clarity on the total volume.
Vinacas reported an anticipated reduction on export volume of 5-7% estimated.
Is slow for the time being. Lot of buyers in US and Europe are enjoying their summer break and will be back middle/2nd half August. Also, the Chinese are expected to enter the market the same time. It will depend on this demand -combined to the supply of course- what the market will do. Will buyers all at once jump into this market then prices are expected to increase.
When demand will remain limited, prices might come down a bit more although somebody (the trader or the processor) has to take a loss as prices for RCN are not in line with the current kernel prices already!
Our recommendation remains to buy ‘specials’ when they show up and have at least 50-75% cover till April 2018.