The market has simply not recovered from the flood devastation during early 2013. Not only should we consider a certain % level of damage to raw material (incoming nuts as high as 40 or 50% rotten are unusable!) but the overall processing capacity throughout the range of factories is down. Logistically shipments have been running one to two months behind all season and this has meant demand has been struggling to get ahead. As we approach October many exporters confirm they will finish for the season in the coming weeks due to insufficient raw material to continue processing.
So the question now on everyone’s minds is, ‘will we have any carryover this season?’ ‘If so how much?’ We must consider that that this time last year there was a carryover over some 250 fcls, which had to be liquidated. Having large stocks in these final months of the calendar year is hugely disadvantageous for the exporters as it ties up all their cash. In this situation the price is pushed down for a quick sale of remaining containers. Now we are in a different position whereby the carryover looks non existent, therefore prices are not coming down. This is also dangerous for new crop 2015 because as we suspect, we will still be on these high levels as the collectors start to gear up for new season harvest. And highly priced exports for final remaining lots of 2015 means big prices will be asked by the collectors for the first lots of raw material.
On the demand front we see continued regular spot demand from end users for afloat containers and landed goods. Going forward we also see demand for uncovered months of Nov – April. At this stage it seems difficult to see where the raw material will come from for those months.