Raw cashew prices increased sharply, exporting businesses encountered difficulties

According to the Vietnam Cashew Association (Vinacas), at the end of February and March 2024, Vietnamese businesses signed contracts to buy raw cashews, at which time the price of raw cashews was at 1,000 - 1,100 USD/ton. However, in just over a month, the price of raw cashew nuts has been pushed up to 1,500 - 1,600 USD/ton, an increase of nearly 50% compared to before. This is a development that has never happened before.

Raw cashew prices increased sharply, exporting businesses encountered difficulties

The reason given by Vinacas is that some raw material suppliers use the reason of crop failure to not deliver or request a price increase according to the current increase before continuing to deliver. Previously, the International Nut and Dried Fruit Council (INC) announced that raw cashew output in Africa decreased by about 7% due to adverse effects of weather.

According to the Ministry of Agriculture and Rural Development , in the first 4 months of 2024, cashew exports reached 216,000 tons, with a turnover of 1.16 billion USD, an increase of 32.4% in volume and an increase of 21.2% in value. compared to the same period in 2023. In the context of cashew processing and export in the first months of 2024 going quite smoothly, raw cashew suppliers raising prices or not delivering will cause many difficulties for exporters. Vietnam export.

Normally, processing enterprises also sign cashew export orders based on the purchase price of raw cashew nuts. With the current price increase, processing enterprises cannot balance selling prices and must suffer large losses. With the disruption of raw cashew supply sources, it is likely that many Vietnamese businesses will not have enough sources of goods to fulfill export contracts.

Many businesses are concerned that in the third and fourth quarters of this year there will be no export goods. Since then, contract disputes have erupted between Vietnamese businesses and foreign cashew roasters and supermarkets. We are at risk of contract fines, loss of reputation, and loss of export markets.

According to the Vietnam Cashew Association, although Vietnam is the world's leading processor and exporter of cashew kernels; Processing capacity is about 3.5 - 4 million tons of raw cashew nuts each year, but domestic supply is increasingly decreasing.

Up to now, only about 10% of the demand for raw materials for processing has been met, the remaining 90% depends on imports , of which West Africa alone accounts for 70-75% (about 2.3 million tons/year). Therefore, if the situation of breaking deals and manipulating prices persists, the risk of shortage of processing materials will exist in the second half of the third and fourth quarters of this year and affect the first quarter of 2025.

In the context of many complicated market developments, Vinacas recommends that businesses make every effort to ensure maximum processing and delivery activities according to signed contracts. In case there are not enough raw materials, negotiate and discuss with cashew kernel buyers so that customers understand the situation and share difficulties.

In addition to early price negotiations with buyers and sellers, Vinacas said it will ask the Government for support and the association will make a list of companies exporting raw cashew nuts that do not comply with the contract for sanctions. In addition, it is possible to consider suing these businesses in international courts.