| As in one of the presentations I attended this week was mentioned: making long term decisions based on short term factors can be damaging! And this is a fact. The Trump administration is making the overall market very uncertain. As Vietnam (biggest processor) is depending for a big part on the US market, it is hard for them to make the calls. How much RCN to buy from Africa, what about the Borma kernels exported to Vietnam for further processing (which are important to the African processing industry) and what will the situation be in 90 days from now, are big question marks. Supply: most of the growing areas are forecasting average crops. India and Cambodia are claiming that crop might be down but so far the new crop arrivals looks OK. West Africa is hit by drought and 2nd and 3rd crop might be down. Keep in mind that usually the quality of the 2nd and 3rd crop is less. Total world supply should be better than last year. RCN prices have to come down as current equivalent of kernel prices require lower RCN prices. The African producing countries are awaiting news about the import tariffs as African kernels might have lower import duties. This would be in favor of the African processing industry, for the US importers/buyers. Demand: EU demand is OK. Higher prices in EU will be seen on the shelfs from middle of the year on and this might have an impact on consumer demand. US demand is down. US importers/buyers are pushing to get their contracts in/shipped within the 90 days tariff-pause as they are uncertain what import duties will be after that time. For later positions they are waiting to see what import tariffs needs to be calculated. Those lower than usual forward sales might push prices up later in the season when cover needs to be done. Indian demand (still by far the biggest in the world (almost double of US and EU demand)) is good. Overall our recommendation would be to keep a close eye on the developments. Cover back to back and do not take long positions based on what we know today as this easily & quickly can change. |
