Dear Patrons of Cashew Week While we welcome all our readers to the prestigious international conference on cashew at Goa,

we thank all our subscribers and sponsors for their support which paved the way for this print edition. As we all know, Goa and cashew have a special relationship as Goa is associated with its beautiful beaches abound with lush green cashew trees and the processing of world famous feni. While we have presented the picture of the national and international cashew markets in our regular features of the weekly, we also have a collection of articles relevant to the occasion, written by eminent writers focusing on various aspects associated with cashew. The cashew markets across the world continue to be dull and kernel prices seem to have got stuck somewhere in a range for a long time. The reason for the same seems to be the extra caution being exercised by the players who are deferring any forward positions and are transacting small quantities with confirmed orders only. The whole industry is waiting for cues from the demand side for this lull to be broken. We hope that the discussions in the conference will throw light on the upcoming demand situation in the coming festival season. While on one hand we need to ponder over the economics of current cashew cultivation and processing and the ultimate kernel prices which determine the same, we must acknowledge the ever growing appetite for cashew and its products across the world. While Africa is rapidly increasing its processing capacity and Vietnam is having issues with maintaining its plantations, it is high time that India has to focus on enhanced productivity technologies and area expansion for a larger supply base in order to maintain its leadership among the cashew processing nations of the world. Along with this, we need to focus on quality and food safety aspects to satisfy the discerning consumers of tomorrow. We hope that the conference will provide an array of thoughts and enrich the knowledge of the world cashew community on these pertinent aspects. Wish you Happy Reading from the Cashew Week Desk

Table of Contents

Sl. No. Content 1 2 3 4 5 6 7 8 Development of Cashew in Goa Cashew Nut Shell Liquid in India Indian Cashew Industry Meeting Competitive Challenge of Vietnam Cashew Nut is in the Seed Indian Cashew Market International Cashew Market RCN Quality in Cte dIvoire Currency Movements

Page no. 5 8 9 14 15 27 29 30

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Development of Cashew in Goa

Satish S. P. Tendulkar Director of Agriculture, Government of Goa

Cashew as everybody knows was introduced in Goa by Portuguese who ruled this State for four and half decades till 1960. The tree being a very hardy and easy to grow in the tropical areas was introduced as a tool for soil conservation on steep slopes, on hills in Goa in between year 1550-1600. But the real economic value of cashew nupt was known to people only after about 100 years of its introduction. The technology of processing of cashew in Goa is thus 250 years old. In course of its cultivation the grower understood the value of its fruits for making alcoholic drink feni and records of feni making are traceable upto year 1870. Today cashew is generating produce worth Rs. 200 crores annually for the State and involving more than 4 lakh population of the State in direct and indirect employment. One third of the area under cultivation in Goa is under Cashew covering 55000 Ha and producing about 25000 tonnes annually. The State has about 15000 ha under high yielding grafts and remaining area is under seedling progeny. A large chunk of land under cashew of about 7000 Ha is with Goa Forest Development Corporation, which is also seedling progeny. The remaining all area is in private

holdings. The average productivity of cashew in Goa is about 450 kgs per hectare with trees ranging from 60-250 per hectare. The per tree production from sparsely populated plantation is more while is very low in thick plantation. The sparsely populated plantations are also not cared properly, and in many of the places the wild bushes and shrubs have been growing rampantly. The need is therefore felt for cleaning such areas to facilitate optimum plant population to enhance production. However, the forest regulations have been a hindrance in this activity. The high density plantation out of seedling origin generally tend to be tall and very frequently the trees are seen broken down in rains. The stem borer problem is noticed to be increasing in such areas. The grafted plantations are being established in Goa for last 15-18 years. The Vengurla-4 is the most predominant variety which is cultivated followed by Vengurla-7 and Balli-2 variety. The average yield is about 600-700 kg per hectare, though some plantations have been harvesting upto 2000 kg per hectare. Considering the present market rate and the yield of feni the farmer can earn anywhere

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between Rs 20,000/- to Rs 70,000/- net profit per hectare from cashew with systematically managed plantation.

The feni making industry is thus supportive to the production of quality cashew. The plantation of cashew in Goa are heterozygones.

Cashew in Goa is generally grown in neglected hill slopes without irrigation or manuring, thus by default it is organic in nature. Many of the processing units exploit this situation for exporting this product as organic. However, much need to be done to improve the productivity of this crop to meet the ever growing demand of this organic cashew. There are about 38 cashew processing units in Goa with a processing capacity of more than 35000 tonnes. However, much of the local cashew is marketed outside Goa and local processing units face a shortage of produce. The deficit is thus met from the imports from other States or from other countries.

The vide varieties of plants with different characters of fruit, nut, productivity and quality are observed. The plantations are thus a very good source for the botanist and breeders. The cashew clones developed in Goa are mainly selection of the available germ plasm. The Balli-1, Balli-2, and Bhaskara are some of the examples. Taking clue from the researchers some of the farmers have identified some of the local high yielding trees and are multiplying them. This shows the immense wealth, the State is having in terms of germ plasm variability which is ready for exploitation for economic betterment of cashew in the state as well as for the Country. Development of Cashew is taken up in the State

Cashew in Goa is unique. It is mainly because the crop in Goa is not harvested but is collected. The fruit ripens on tree and the fallen fruits are collected. This provide full term for the fruits to develop sugar and other components including the size of kernel which provide an unique taste. The full development of the kernel also increases the recovery for processing industry and improves the keeping quality of raw nuts, this is a major reason for the high demand of Goa cashew by processing industry which get a premium rate in the market.

with support from National Horticulture Mission. Annually about 300-500 Ha of new area is covered while about 700-1000 ha is rejuvenated with grafts. Assistance of Rs 11250/- per ha is provided for new area and Rs 15000/- is provided for rejuvenation. The assistance is provided in three instalments. Assistance is also provided for soil and water conservation measures. Many of the plantations are now certified as organic plantation with linkage to processing units. These farmers get Rs 4/- to Rs 5/- extra per kg of raw nut. Incentive of Rs 10,000/-

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per hectare is also provided for organic certification in cluster of 50 Ha. The support from Government needs to be enhanced to at least Rs 22000 per hectare due to rising cost in recent years. 3. The cashew grafts are produced in government nurseries as well as in private nurseries. Annually about 4 lakh cashew grafts are produced in the State. Goa has a well developed marketing setup of new cashew. The Goa State Agriculture Marketing Board has market yards in 11 places with facilities for correct weighing and record. The processing units either buy the raw nuts at this market directly or purchase through the traders of cashew nut. The processing in Goa is generally by steam roasting. However, some units produce and sell drum roasted cashew at premium rates. Cashew cultivation is getting more and more popular and added thrust is given for increasing the production and productivity. However, some issues need to be attended on top priority to meet the ever growing demand of this crop by processing industry. Some of them are as below:1. Increasing productivity per unit area: The per hectare production from cashew grafts need to be enhanced to at least 1500 kg by proper management, manuring and other methods. A standardised package need to be developed for 9. 7. 8. 6. 5. 4. 2.

the State. Proper manuring schedule specially with certified organic inputs need to be standardised for organic cashew. The widely available cashew germ plasm in Goa needs to be exploited for selection of new lines before they get vanished with induction of grafts. This plantation needs to be protected as germ plasm bank. The old cashew plantations as well as the newly developed once from grafts have been showing an increasing trend of stem borer infestation. The traps or other biological means for its control need to be developed to increase the life span of the cashew plantation. The inter crops in between cashew under rainfed cultivation need to be recommended without any competitive effect. The production of cashew feni or ethanol from cashew apple juice needs to be standardised as a by product like from sugarcane molasses to improve cashew quality and income from cashew. Pest control by fogging of pesticides need to be standardized. Contour trenching or continuous contour bunds need to be created for soil and water conservation. Drip irrigation should be promoted.

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Cashew Nut Shell Liquid In India

Omprakasn N. Phadnis, M/S. N.S. Phadnis, Panruti, Tamil Nadu

Cashew Nut Shell Liquid (CNSL) is used in India for ages now. Since the Portuguese brought this crop to India, it showed its presence more on west coast than on south. For decades only Kerala, Karnataka and Goa were good cultivators and it took some years for Tamil Nadu and AP to join them. Today, Gujarat, Orissa, West Bengal and some parts of Manipur are also cultivating. In Kerala and Goa, the oil was initially used for the purpose of water proofing. All the dhonies i.e. small boats were applied this oil which was extracted by kiln method in various villages in Kerala. It was only Pierce Leslie which was doing the production of CNSL in scientific and mechanized way. They were having bath oil roasting method. After that this cashew processing method developed lot in Kerala but in Mangalore area and Goa area the nuts were processed by drum roasting method only. Later, it was discovered that the kernels got yellowish and therefore, in 1970s, the bath oil method was discarded and steam roasting came in to existence. This method is fully acceptable and modernized now every where. The shells that are available now are subjected to crushing by expellers and the oil is extracted from the shells like ground nut kernels. This oil is subjected to various methods of purification.

As mentioned, the initial use of the oil restricted to water proofing and it followed with some medicinal use. Later on, it was discovered that the CNSL polymerizes fast and could be used as phenolic substitute. It was used in rubber industries. The RRL, Hyderabad were able to distill the CNSL and spread the use of cardanol, residol etc. Card Chem Industries of Hyderabad were pioneer to set us the first distillation unit of cardanol from CNSL in India. Today there are more than 15 well working distillation units in India mostly spread in south. The cardanol which is having phenolic structure is used as phenol substitute and has good demand overseas in brake linings, paints and chemical industries including colors. CNSL has been in use in brake linings, paints and water proofing industries along with in plywood industries too. Both CNSL and cardanol are used in foundry industries on a very good scale. About few years back, when the crude oil prices started raising globally, once again thoughts went for the fuel purpose of CNSL. Trials are on for using it as bio-diesel fuel. At this moment it is used widely in blending furnace oil. The furnace oil properties does not alter much and it is very profitable for the furnace oil suppliers to add CNSL to bring down costs of furnace oil.

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Indian Cashew Industry Meeting Competitive Challenge of Vietnam

Madhoo Pavaskar 1, Archana Kshirsagar1 History of Cashew Industry in India Cash in cashew seems to reveal that cashews are commercially very valuable processed nuts in the world. The English name cashew is derived from the Portuguese name for the fruit of cashew plantation, caju. In India also, cashew is commonly known as kaju, and was brought by the Portuguese from Brazil during the 16th century, and was first planted in Goa, from where it spread to other parts of the country, and thereafter across Southeast Asia, and even Africa. What is the wonder about cashew? Usually, a seed is inside a fruit; but, unlike other fruits, cashew seed or nut can be easily noticed, without cutting the fruit, as it is attached outside to the lower portion of the soft cashew apple, which is not so much a fruit as an enlarged stem of the cashew tree. How captivating is the sight of a cashew tree, indeed! Incidentally cashew nut also ranks first among the world production and trade of edible nuts. Four centuries ago, when the Portuguese landed on the Indian soil, they brought with them the priceless The products of cashew fruit are cashew apple and nuts/kernels. Cashew apple is used in the preparation of jams, as also for the manufacture of soft and alcoholic drinks, in Brazil. In India, cashew apple is extensively used only in Goa to prepare cashew liquor called feni. In India, cashew processing began during the first half of the 20th century. The processing was tree nut, Cashew. Cashew came, conquered and took deep roots across the entire coastal region of India. Cashew found the Indian soil more congenial for its growth than even its homeland - Brazil. Not surprisingly, cashew soon gained popularity as a cash crop in many parts of the country. Large-scale commercial cultivation of cashew commenced in India during early 1960s, however. Today, India is the largest producer and processor of cashews, and is still seeking new areas for cultivation in the country. Cashew is presently grown in Kerala, Karnataka, Goa, and Maharashtra along the west coast, and in Tamil Nadu, Andhra Pradesh, Orissa, and West Bengal along the east coast.

Dr. Madhoo Pavaskar is Director, Research & Strategy, Financial Technologies India Limited, Mumbai. Archana Kshirsagar is Assist. Vice President in the same company, and is working with Dr. Pavaskar. The views expressed in the article are personal.

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then manual. Cashew kernel is covered by a thin membrane called testa, which contains non-edible substance tannin. So, processing of cashew kernel is indispensable. The yield of kernel is around 2224% of raw cashew in shell. The major by-product of cashew processing is cashew nut shell liquid (CNSL), which is an important raw material used in the manufacture of resin. India is the second largest producer of raw cashew nuts in the world, the first being Nigeria; India ranks number one in area under cashew plantations, though. To be fair, almost 70% of the global raw cashew production in 2010 was accounted for by just four countries, namely, Nigeria, India, Cte d'Ivoire, and Vietnam. If three more countries, namely, Indonesia, Philippines, and Brazil, were added, then these seven countries together contributed as much as 84% to the total world production in that year. While India shared nearly 19.6% of the world acreage under cashew in 2010, it contributed 22.2% to the world production. This was because its per hectare yield of cashews in shell at 660 kg was then slightly higher than the global average of 585 kg. Nevertheless, Indias average yield of cashew nut in shell was much less than similar yields of other major cashew producing countries like Nigeria (2 tonnes), and Vietnam (1 tonne), and Philippines (4.8 tonnes) India is also the second largest exporter of shelled cashew (kernels) in the world, and follows Vietnam that leads globally in cashew exports. India enjoys

comparative cost advantage in not only production of cashew fruit, due mainly to long coastal line of the country that favours cashew cultivation, with apt soil and climatic conditions, but, more importantly, also processing of raw cashews, owing to abundant availability of cheap and skilled labour. To be sure, India may well be regarded as the global leader in cashew processing, mainly because of the dexterity of its labour. For, when processed manually, broken nuts hardly account for 20% of the countrys output of processed kernels. Location of Cashew Industry Cashew processing industry in India gathered momentum through the last over half a century. In the early years, the industry was located mostly in Kerala, which had then over 50% of the cashew plantations in the country. But land ceiling legislation restricted the expansion of cashew sowing in Kerala, as demand for cashew nuts grew. Therefore, over the years, cashew cultivation extended to the other coastal states of the country, more particularly in the Sindhudurg district of Maharashtra. The cashew industry promptly developed in other states, too. High value added tax (VAT) of 12.5% in Kerala also fuelled the growth of the industry in other states, where such tax was around 2-4% only. The number of cashew processing units in the country increased rapidly from 170 in 1959 to as many as 3650 in 2005-06, the last year for which the official government data are available. The total capacity of processing units in India was then 15 lakh tonnes in

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terms of raw nuts, and the capacity utilization was 75%. Maharashtra had then 2200 units, followed by Kerala 432 units, and Tamil Nadu 417 units. Nearly 84% of the processing units in Maharashtra were in the small scale cottage sector. Probably, at present, the country may have around 4000 cashew processing units, with an installed capacity of about 18 lakh tonnes. Assuming 75% capacity utilization, as in 2005-06, the utilization may presently be estimated at around 14 lakh tonnes. Half of the capacity is utilized through domestic supplies, while for the rest the industry depends on the imports. Cashew Processing Cashew processing involves roasting/boiling, moisture conditioning, shelling, drying, peeling, grading, and packing. Four types of methods, namely, sun drying, drum roasting, oil bath roasting, and steaming, are adopted by the different processing units. Traditionally, experienced semi-skilled workers processed raw nuts manually. Since 1960s, the processes came to be mechanized for roasting, CNSL extraction, and shelling. Nevertheless, for the most part, cleaning of raw materials and kernel grading by sizes have still remained manual operations. Although, cashew processing industry in India involves low capital investment and operational costs, and therefore achieves much greater

efficiency in terms of yield, it needs a large number of experienced workers, working at unhealthy levels of exposure to CNSL. In contrast, the mechanized methods are more vulnerable due to shortage of spare parts, and require large volumes of raw material supplies for efficient operation. Moreover, though mechanization is introduced in cashew processing, the availability of skilled and cheap labour, and better quality of kernels under manual processing, bounds the scope for wide mechanization. Mechanization is confined to mainly in roasting/ boiling, and packing. But manual labour continues to be in use in such processes as shelling, peeling and grading. Not surprisingly, capacity utilization of fully mechanized units in the country, by and large, operates at below optimum. Nevertheless, the industry in India, being mostly manual and labour intensive, employs as many as four lakh workers, with 95% women employees. Exports of Cashew Nuts In the fiscal year 2011-12, India exported almost 132,000 tonnes of shelled cashew nuts, as against 106,000 in the previous year. In fact, Indias cashew nut exports increased from 82,000 tonnes in 2000 to 132,000 in 2011-12, which represented an annual growth of 4.45%, the exports witnessed ups and downs during the intervening years, though. Whats more disturbing is that even though India ranks second globally in cashew exports, a small country like Vietnam, whose production is less than half of that of India, exports twice as much as India ships abroad. Vietnam has thus emerged as Indias major

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competitor in global cashew export trade. Worse still, India even imports, albeit, small quantities from Vietnam, of late. Although Nigeria is the leading producer of cashew in the world, it seems that neither does it export cashew nuts in shell, nor cashew kernels in meaningful quantities. It appears that it consumes most of its output of cashew in shell as well as cashew kernels as snack food domestically. Very small quantities of cashew nuts with shell are exported to mainly India. Cashew processing industry in Nigeria is still not well developed, and caters mostly to the domestic market. Quite a few of the Nigerian processors have joint venture partnerships with Indians and use Italian (Oltremare), or Indian technology. Overall, not being a major exporter of cashew kernels, Nigeria, despite its predominance in the production of cashews, is hardly as yet a threat to the Indian cashew industry in the global cashew kernel market. Among other nations, Brazil ranks third major exporter of cashew kernels. It exported 42, 000 tonnes of shelled cashew nuts in 2010. But its exports have been hovering erratically between 30,000 and 50,000 tonnes through the first decade of the New Millennium. They had peaked at 51, 500 tonnes in 2007, but have fallen thereafter. Though official statistics are not available as yet, it seems that Brazils cashew kernel exports had probably dropped further in 2011, since its production of

cashews in shell had more than halved from 220, 000 tonnes in 2009 to as low as 104, 000 tonnes in 2010, with a dismal per hectare yield of barely 140 kg the lowest amongst all the cashew producing countries in the world. In fact, Joy Business of Ghana recently reported that Brazilian investors are seeking to set up cashew nut processing plant in Ghana, probably owing to Brazilian farmers moving away from cashew cultivation to other crops like coffee and cocoa. Overall, it appears that the Indian cashew processing industry and cashew export trade may not face a severe competitive menace from Brazil. The real threat to India is from Vietnam only. Since the domestic supplies of raw cashew nuts in both the countries are falling short of the requirements of their processing industries, both countries are importing mainly from Cote d Ivoirie, Tanzania, Guinea, Ghana, and to some extent from Benin, Indonesia, and Mozambique. No doubt, Vietnams exports have been growing at almost 17% per annum through the past over a decade, compared to just about 1.25% growth witnessed in Indias cashew exports. Yet, Vietnam is perhaps not so much competing with India in the international cashew export trade as in the global markets for importing raw cashews with shell. Meeting Competitive Challenges from Vietnam But even Vietnam may not really be as big a threat to India as it appears. For one thing, Vietnams domestic production of cashews with shell has been rapidly falling in recent years, having slumped

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in 2010 to as much as a fourth of what it was in 2010 - from 1.25 million tonnes to merely 29, 000 tonnes. Though precise reasons for the swift fall in Vietnams cashew production is not known, it seems that, of late, Vietnam has moved to augment its production of rice and spices, especially pepper. Indias cashew output, on the other hand, has remained steady around 650, 000 tonnes. Manifestly, Indias dependence on imports of raw cashew nuts is much less than that of Vietnam.

markets at a lower average cost of US $ 992 during the same year. In fact, India has been consistently buying raw cashews in the global markets at a price lower than the average world import price. As a result, the cashew processing margins of the Indian cashew industry has remained higher than that of the global industry. That gives India a competitive edge over other cashew exporting countries, including Vietnam. India also has an added advantage in that it can expand

This is not all. Export demand for cashew kernels from the developed countries like USA, Europe, and Japan, which together account for 90% of world imports of shelled cashew nuts, continues to remain strong, despite recession in those economies. Consequently, the average unit value realization on world cashew nut exports has swelled from US $ 3, 369 per tonne in 2002 to US $ 5, 351 in 2010, showing a net increase of 59% over the period of eight years. The average unit value realization on Indias exports of cashew kernels, however, rose by 87%, from US $ 3,251 per tonne to US $ 6, 066 over the same period. The higher rise in the unit value realization by Indian cashew exporters seems to reflect the superior quality of Indian cashew kernels. Whats more, while the average global unit value cost on imports was higher at US $ 1, 087 per tonne in 2010, India could procure raw cashew in the world

its cashew cultivation owing to the availability of plenty of land in its extensive coastal areas. Vietnam does not have a similar advantage. What India needs to do is to adapt a phased replanting of cashew trees with grafts of improved varieties to achieve a higher growth rate of cashew production. At the same time, the cashew industry should also improve its efficiency and viability by adapting high levels of hygiene standards to increase production of better quality kernels that can fetch higher value in the export markets.
Benchmarking the Global Cashew Industry, Micro and Small Enterprise Trade-Led Growth Program in Brazil, Development Alternatives, Inc (DAI), Melissa Hall, Pareen Patel, German Sarmiento, Nikola Smith, Aimee Sostowski, and Stephanie Waxman, May 2007.

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Cashew Nut is in the seed

Dr. Lakshmanan, Head, Horticultural Research Station

Cashew processed

Kernels from

are raw

cashew nut pointed to seed but actual nut in side the seed. The seed that inculcate the tasty nut called kernal. The nature adds tangible delicious and sweet olfactory from soil to tree, tree to fruit, fruit to seed and finally seed nut in a miracluls morphology which made the cashew nut has dollar earning crops. The seed coat is a guard with tannin odors may able to preserve the cashew nut luster, shinning, glossy appearance, plumule and radical, with considerable air pouch from the effect of biotic and abiotic factors. That means cashew nut in the seed is the nature phenomenon, which deals the postharvest management of food security and preservation by the cashew apple before abscission. A Cashew nut in the apple may not be tasty and remains as seed if excites as such in the nature. The composition of cashew apple like, water, sugar, mineral, acids, fats and carotene compound when reaches to seed part the moisture content reduces but ample increase in carbohydrate, protein, fat, calcium, phosphors and iron. In addition, over to the kernel seed testa that forms with moisture, tannin, fiber and oil act as cashew nut inner protection.

cashew seeds, those intact from the shell grading them to required standard by the food companies all over the world. The Kernel is dried to loosen the skin which is then carefully peeled off. Cashew kernels should have moisture content not greater than 5 percent by weight and preserved in a dry and clean place. Cashew kernel is surrounded by a fine brown seed coat, contains antioxidants which protect the kernel from penetration by atmospheric oxygen so preventing it from becoming rancidity. Cashew kernel has oil, edible linoleic acid and kernel cake. Cashew nut shell liquid has phenolic compound. The cashew testa has tannin of commercial utility. Majority of the nut are in the fruits, or fruit includes nut. In Cashew crops cashew apple (fruit) holds the seed at distal end. Cashew apple with conical shape and size and its juice contains 80-85% water content. The seed attached to fruit, which has edible kernal called cashew nuts. The general statement for

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Indian Cashew Market

Price Movement\ Average FOB prices (USD/lb) of W-320 grade Kernel

Commentaries by Experts Mr Pankaj N. Sampat, Samsons Trading Company FOB prices USD per lbs Prices for Grades 09/29/2012 W240 3.60 to 3.75 W320 3.25 to 3.40 W450 3.00 to 3.15 SW320 3.00 to 3.15 SW360 2.75 to 2.90 SSW 2.50 to 2.65 WS 2.00 to 2.25 WB 2.10 to 2.30 LP 1.65 to 1.80

This week W320 grade prices moved down to USD 3.20 to 3.35 per lb compared to last week level of USD 3.25 to 3.40 per lb FOB at Mumbai. Raw Cashew Nut Price Trend-India (Rs.80/kg)

Prices for 10/06/2012 3.55 to 3.75 3.20 to 3.35 3.00 to 3.15 3.00 to 3.15 2.70 to 2.90 2.50 to 2.60 2.05 to 2.25 2.20 to 2.30 1.60 to 1.75

This week, RCN prices remained stable at Rs 60006250 per 80 kg bag in Vetapalem (AP).

During weeks 39 + 40, we saw slightly more activity from USA and EU than previous weeks. BUT, the cashew market is continuing to pass through the longest quiet and steady period in many years. Despite this, there has not been much change in prices in the last 3 months!! BUT, the range of offers from different processors continues to be wide current prices are W240 from USD 3.55 to 3.75, W320 from 3.20 to 3.35, W450 and SW320 from 3.00 to 3.15, SW360 from 2.70 to 2.90, Splits from 2.05 to 2.25, Butts from 2.10 to 2.30, Pieces from 1.60 to 1.75 FOB. There has been a slight pick up in activity in the Indian market as well in the last few days. Although there has not been any big increase in prices in domestic market, the appreciation of over 5% in value of INR vs. USD means the equivalent USD prices are higher.

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On the RCN side, there is nothing much to report. There have been some sales from stocks of West African RCN in Vietnam and India. Good volume of West African RCN is still available but quality and consequently realization / kernel parity are a concern. Good quality Indonesia RCN continues to trade at a significant premium. No news from Tanzania or Mozambique about pricing and movement, except that crops should be normal question is how much will be collected + sold (and when). There is no change in the news from Brazil expectations are for a crop below 250,000 tonnes for third year in a row. Supply of RCN is comfortable and unless the 2012/13 crops are bad (in terms of collection rather than actual production); there is no reason to fear a supply tightness. But due to reduced buying in West Africa during the 2012 season, lot of RCN is in the wrong place. Conversion into kernels in the last quarter of 2012 is likely to be less than normal. If kernel activity picks up, processing in first quarter of 2013 may be higher than normal. Demand outlook continues to be hazy especially in USA and EU. Continued economic uncertainty makes it difficult to forecast or project offtake in coming months. Everybody seems to be content making short term deals. Unless this changes and there is some confidence for future planning, periodic buying in small and short trances is likely to continue. Although it is difficult to judge how much forward business has been done, trend of short term covering for the last few quarters and relative quietness in the market for last 2-3 months leads us to believe that buying for shipment in last quarter has been lower than normal. This is corroborated by reports that offtake in many markets in last few months has been slow meaning inventories are lasting longer than planned.

If the offtake in the last quarter picks up, it could mean bunching of buying for nearbys and first half of next year. There is nothing on the horizon pointing to a major move in prices in the foreseeable future. And that would be good for everyone in the chain as stability in prices would induce confidence in consistent supply. But if the Indian demand picks up in next 4-6 weeks and if that is coupled with buying interest from USA and EU for 2013 shipments, we could see some upward movement in prices before the end of the year. However there is no reason to expect any big jump in prices. Another point to be kept in mind is that processing costs have gone up significantly in the last 3 years in all countries. This portion of increase in average price is unlikely to go down. So kernel prices can come down significantly only if RCN prices come down. Overall it would be reasonable to expect a steady market in the last quarter moving in the current range with limited downside and some possibility of a price increase if activity picks up in next 4-6 weeks. Mr Giridhar Prabhu, Achal Cashews Private Limited, Mangalore An important message that needs to go out to the cashew producing community is: TAKE CARE OF POST HARVEST TREATMENT of raw cashews. The estimated loss of global value on this account exceeds Rs 700 crores per annum (100 million Euros). This is calculated at 10 percent of the traded value of raw cashews. The marketing potential loss is much higher. This can be substantiated only when producer trader and manufacturer interests gather to study assess and estimate the losses.

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Cashew marketing is in peril due to quality issues and valuable material is handled badly without information and knowledge about the produce. Cashew markets in India woke up to the seasonal requirements. There is no extraordinary phenomenon to notice. Demand is routine. There is still no evidence of Industrial demand being aggressive. Passive demand for core consumption is on. The markets in India generally are lack luster. The bright spot in worked dried fruit markets is almonds. With a reasonably good crop almond prices have jumped nearly 20 pc. This is both due to physical demand and could be speculative buying Almond prices are hovering at Rs 440 - 445 per kg range. Shell prices are warmer with enquiries from millers and liquid is yet to get liquidity. The next two weeks will reveal the contours of Indian demand. World enquiries could come in at any time and hopefully the lull will turn into active markets for offered materials. The Brazilian crop news is now out in the open. Impact could be guess work. There is sufficient material around of dubious quality. Good quality kernels can be anticipated out of Tanzanian and Mozambique supplies. Mr Rajendra Sabat, Sabat Associate (Cashew Expert/ Consultant), Orissa The cashew market was not showing any good activity

looking to the market situation and coming up Dasara and Diwali. The processors were eagerly waiting for the Dasara and Diwali in which period the the market is always running with full demand. But unfortunately this year neither the market has good demand not having any good sale. Looking to the market position the local RCN is not matching with the kernel prices. Local RCN is quoting at Rs 80 per kg. The current cashew kernel prices in Rs/Kg at Orissa Grades Jeypore Coastal Orissa/Palasa W240 500-510 465-470 W320 470-475 430-445 W450 440-445 405-410 JH 390-395 330-335 K 350-360 275-285 Mr. Biju P, Agro Trade International, Kerala Cashew market is very quiet again. Current prices of cashew kernels at Kollam (USD per lb) Prices for Prices for 09/29/2012 10/06/2012 W180 4.75 4.90 W210 4.50 4.50 W240 3.60 3.60 W320 3.28 3.25 W450 3.05 3.05 SW240 3.25 3.20 SW320 2.98 2.98 Splits 2.50 3.00 LWP 2.30 2.50 LSP 2.10 2.10 Packing : 1x50 Lbs Flexi Pouch, Shipment : Prompt Grades

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Indian CNSL Market Commentaries

Mr Venkatesh, Kanco Southwest Enterprises, Mangalore This week CNSL traded at Rs 22.50 per kg in ExMangalore. The price of Cardanol quoted at Rs 52.00 per kg in Ex-Mangalore. Mr Omprakash N. Phadnis, M/S. N.S. PHADNIS, Panruti, Tamil Nadu As anticipated, the market has zoomed up as far as the CNSL is concerned. The rates after touching as low as 17.50 per kg are around Rs. 20.50 per kg

today and the shell market is Rs. 5.80 per kg. Cake is quoted around Rs. 4.25 per kg. Basic reason is low shelling of raw nuts due to workers non availability. Second reason is low out turn from the shells which is said to be around 18-19% only. Some furnace oil adulterators having connection in Chennai lifted over hundred tonnes around Rs. 19.50 per kg and this has pushed the market up. No international demand is seen.

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Domestic Prices of Nuts

Price Highlights for the week

Mangalore market Kollam market Delhi market Sangrur market Jeypore market Vetapalem market Panruti market Jalandhar Market Cashew Grades Mangalore (Rs/ kg) W180 S180 W210 S210 W240 S240 W320 W1 SW SSW JH S LWP SWP Some improvement has seen in the market with some of the cashew grades Increase in W180, W210, W240 and WSP prices where as, other grade prices were steady to low compared to last week Steady to low in cashew kernel prices from last week Kernel prices remained steady Kernel prices moved up from last week prices W210 and JH prices moved down and other kernel prices moved up from last week prices Kernel prices were steady to high No movement in the kernel prices 09/29/2012 705 661 617 560 551 511 503 489 472 441 432 419 366 331 10/06/2012 705 644 631 573 556 520 511 498 485 441 437 414 368 326 % change in price over last week 0.00 -2.57 2.27 2.32 0.91 1.76 1.59 1.84 2.75 0.00 1.16 -1.19 0.55 -1.51

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Cashew Grades K JB Kollam (Rs/kg) W180 W210 W240 W320 W450 SW240 SW210 S (Splits) SS Butts SB (Scorched Butts) SP LWP WSP Delhi (Rs/Kg) W320 No. W210 No. W240 No. W180 No. 2 pieces 4 pieces 8 pieces Sangrur (Rs/Kg) W320 W210 W240 W180 2 pieces 4 pieces 8 pieces

09/29/2012 379 388 595 529 494 450 432 423 No stock 375 309 322 295 265 322 273 495 660 560 700 363 335 298 603 663 618 703 500 485 460

10/06/2012 392 397 600 538 498 423 397 397 No stock 362 309 317 287 265 317 282 495 658 555 700 355 335 298 603 663 618 703 500 485 460

% change in price over last week 3.43 2.32 0.84 1.70 0.81 -6.00 -8.10 -6.15 -3.47 0.00 -1.55 -2.71 0.00 -1.55 3.30 0.00 -0.30 -0.89 0.00 -2.20 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

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Cashew Grades 09/29/2012 10/06/2012 Jeypore Orissa (Rs/Kg) Local Raw Nuts 82 85 W210 560 600 W240 520 565 W320 475 500 W400 450 470 S240 500 500 S320 460 470 S 385 400 K 360 385 LWP 350 360 SWP 310 340 JH 400 410 Vetapalem AP (Rs/Kg) W210 575-600 560-570 W240 490-500 500-510 W320 430-440 440-445 SW 400 400-410 JH 425-435 425-430 K/LWP 335-340 335-340 W1 400 400-410 JB/Butts 365 360-370 W400 400 400-410 Panruti Wholesale Market Tamil Nadu (Rs/kg) Raw nut (Rs/80kg) 5500 5500 W240 450 450 W320 392 397 W450 388 388 JH 350 350 JK 309 309 LWP 282 287 SWP 250 280

% change in price over last week 3.66 7.14 8.65 5.26 4.44 0.00 2.17 3.90 6.94 2.86 9.68 2.50 -3.83 2.02 1.72 1.25 -0.58 0.00 1.25 0.00 1.25 0.00 0.00 1.28 0.00 0.00 0.00 1.77 12.00

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Cashew Grades 09/29/2012 Jalandhar Punjab (Rs/kg) W320 605 W210 635 W240 535 W180 583

10/06/2012 605 635 535 583

% change in price over last week 0.00 0.00 0.00 0.00

*Mangalore Prices are exclusive of tax. Tax for inter-state sales- CST 3 per cent, Tax for local sales 4 per cent VAT Note: W= White Wholes, S= Splits, SW= Scorched Wholes, SSW= Scorched Wholes Seconds, DW= Dessert Wholes, LWP= Large White Pieces, SWP= Small White Pieces, BB= Baby Bits, SB= Scorched Butts, SS= Scorched Splits, SP= Scorched Pieces, 1kg = 2.24lb Cashew Raw Nuts prices 09/29/2012 10/06/2012 6000 to 6250 6000 to 6250 5000 to 5200 5000 to 5200 5000 to 5200 5000 to 5200

Country Indian RCN (Rs per 80 kg bag) Ghana (Rs per 80 kg bag) Benin (Rs per 80 kg bag)

% change in price over last week 0.00 0.00 0.00

Grades Almond Girdhi New Almond Gurbandhi New Almond California Almond Kernel California Almond Kernel Gurbandi Pistachio Irani Pistachio Hairati Pistachio Peshawari Walnut New Walnut Kernel

Other nuts prices at Delhi market (Rs/kg) 09/29/2012 10/06/2012 % change in price over last week 84 84 0.00 200 200 0.00 308 308 0.00 436 441 1.15 375 375 0.00 850 850 0.00 820 830 1.22 1060 1040 -1.89 185 185 0.00 650 650 0.00

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International Cashew Market

Price Highlights Prices for 10/06/2012 W240 USD 3.60 to 3.65 per lb FOB W320 USD 3.20 to 3.25 per lb FOB
Commentaries by Experts Mr Kim, Khiem Nguyen Co., Vietnam The week was totally quiet without any demand/ trades from buyers sides but prices offered were not changed i.e. W320 at USD 3.20 to 3.25, W240 at USD 3.60 to 3.65 per lb fob for October and November shipments. Very limited sales reportedly done at USD 3.19 per lb fob for Prompt. Reliable sellers offered W240 at USD 3.65, W320 at USD 3.25, WS at USD 2.10 to 2.15 per lb fob for October - December shipments but no business done at the said levels. There might be some minor demands but too weak and prices lured were lower compared to the levels desired by sellers. The limited and seldom demand during the past week could not temporally drag the kernels market to its firmer status like before. But there is still strong feeling that there are some demands in the coming time as buyers will have to need something at least in preparation for their on-

Market Vietnam Vietnam

Source Mr Kim, Vietnam Mr Kim, Vietnam

coming holidays. It is however, the time for this is not long enough so demand may be weak compared to previous years so chances for the prices to be strongly waken up is limited. China market was quiet with weak prices offered to this market. Brokens demand from this was also quiet. FOB prices of cashew grades that sold last week for October 2012 Grades W240 W320 W450 LBW320 WS WB DW LP Price USD per lbs (09/29/2012) 3.60 to 3.65 3.20 to 3.25 3.10 3.10 2.10 2.10 2.30 1.60 to 1.65 Price USD per lbs (10/06/2012) 3.60 to 3.65 3.20 to 3.25 3.10 3.10 2.10 2.10 2.30 1.60 to 1.65

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Mr Jim Fitzpatrick, Ingredient Sourcing Solutions More trade in the past week but still way below what would have been considered normal volumes a couple of years ago. The market has been in a relatively quiet pattern since this time last year bar the over reaction in April and May. This has led to some frustrations for processors and others but has led to certain price stability for the past three months. This is not yet enough to encourage a return to far forward purchasing on the part of buyers but does at least help to build some level of confidence that cashews are an item that will eventually become more easily judged and therefore promoted at retail level. The quiet demand pattern is not unique to cashews as a number of tree nuts and especially peanuts are returning from volatile times to a more normal pattern What is unique to cashews is the wide differences in price between processors which makes it difficult for buyers to determine exactly where the market is at a given time and often to unfair comparisons between justifiably higher priced, reliable processors and their less reliable competitors. Given

that the cashew kernel trader is, if not extinct then at least an endangered species, the ability of less frequently involved buyers to identify reliable processors is in question causing continued conflict and damaging the reputation of the industry. Perhaps it is time for some generic marketing approach on the part of the fledgling World Cashew body to address this and other problems. Short term there is little in the way of market moving news to be expected. The general expectations for crops are well known. There is a stock of RCN in West Africa slowly making its way to be processed although much of it may never make it and will undergo a miraculous rebirth as 2013 crop next March. Demand is lacking energy and the lethargic pattern is likely to continue especially in the North American and European markets as buying season 2012 ends. Price movements are likely to be a function of local factors and financial pressures indicating that when good reliable processors want to sell toward the bottom of the current range cashews should be bought.

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RCN Quality in Cte dIvoire

Mr. Pierre RiCAU NKalo Services - RONGEAD Cte dIvoire is the second cashew producer in the world with around 420 000 Metric Tonnes in 2012. It is also currentlythe country where cashew production is growing the fastest in Africa. Most of the Ivoirian cashew acreage has been planted between 1995 and 2002, and our expectations are that production in Cte dIvoire will reach his peak around 2020 with a production between 500 000 and 550 000 metric tonnes. In 2012, Cte dIvoire will be the 4th country for cashew processing with more than 20 000 MT of RCN processed locally, but still around 90 % of the production is exported to India, Vietnam and Brazil as Raw Cashew. Even if it is expected that local processing will grow in the coming years, Cte dIvoire will still mainly be a raw cashew supplier for the coming 10 years. Each year, RCN importers complain about the bad quality of Ivorian cashew. Yet, when you compare farm gate quality, the Ivorian cashew is not very different from Beninese or Bissau Guinean cashew nut. Averages KOR at the farm gate are between 48 and 51 lbs depending of Ivorian regions, and Nut Count is generally around 190 nuts / kg in the whole country. But when Ivorian cashew reaches Asian factories, yields often fall to 42 to 46 lbs per bag. Where and when happened this big decrease? The decrease happens mostly during the cashew storage and transport and mostly because cashew trading come late after the harvest. There is no payment for quality at the farm gate level as local traders mainly try to get big volumes as soon as possible. So farmers find no interest to dry the cashew after the harvest. Most of the time, cashew will be stocks several weeks in plastic bags and is dried only when it reaches the port and exporters facilities. Cashew harvest normally begins during the second half of February. Most of the cashew is harvested in March and April. Generally, the short rainy season also called season of mangoes rains lasts all April Month. That is why, from April, humidity rate grows in cashew stocks and quality begins to decrease. More the storage is long; worst is the quality, as it can be seen in the chart below.

Another problem is that for exporters it is not always interesting to spend time and money to get better quality product as many RCN importers never pay premium for good quality and often do not pay last part of the contract arguing of bad quality even if the quality was good. On this point, it seems to be really important to get an arbitrage authority and common quality control standards between India, Cte dIvoire and eventually Vietnam to get a real valuation of quality. Ivorian government has amongst his priority to improve cashew average quality but it is really necessary that good quality bring value until the farm gate level to get a big change.

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Currency Movements

Forex Rates (In USD)

Currency Indian Rupee Euro Japanese Yen Brazilian Real Chinese Yuan Singapore Dollar Tanzanian Shilling Thai Baht Mozambique New Metical Vietnam Dong Indonesian Rupiah Benin CFA Franc BCEAO Ghanaian New Cedi 09/28/2012 52.855 0.778 77.930 2.026 6.286 1.228 1574.550 30.834 28.500 20850.000 9569.100 507.790 1.897 10/05/2012 51.916 0.767 78.660 2.032 6.324 1.229 1575.750 30.620 28.500 20890.000 9589.000 504.200 1.899

USD vs. BRL Movement

Comparative Movement of Currencies vis--Vis USD in cashew Processing Regions (Weeks Starts from January2012) In recent time Brazil trade account improved as shown in above chart from Aug12 low of 805.86million dollar. The recent weakness in Real which is currently around 2.06v/s dollar was mainly because of improvement of Brazil export sector. However still the current account balance is deficit as shown in above chart but shows some signs of improvement. So Improving Brazilian trade and current account balance to keep Brazilian Real weak.

(Note: Prices Indexed to the first week prices assumed to be 100)

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the State Treasury sold more debt. The dong was steady. The government on Oct. 5 auctioned 500 billion dong ($23.9 million) of three-year notes and 850 billion dong of two-year bonds at 9.9 percent and 9.7 percent, respectively, according to Hanoi Stock Exchange. The yields were 10 basis points higher than at a sale of similar-maturity securities on Sept. 27. The Brazilian real closed weaker to the dollar Friday after the countrys central bank sold reverse-swap contracts to deter the currency appreciation. The real exited active trading at BRL2.0293 to the U.S. dollar, according to Tullett Prebon via FactSet, after Thursday closing price at BRL2.0167. The Brazilian central bank sold the equivalent to $1.29 billion in reverse swap contracts Friday. Such auctions give the investors a chance to exchange dollar-linked bonds for paper indexed to domestic interest rates. They tend to support the dollar against the real by removing dollar-hedged contracts from the market. Intervention by Brazils central bank and declarations from government officials aiming to protect local exporters have kept the real in a tight trading range between BRL2.00 and BRL2.05 in recent months. Technically Brazil currency poised to extend uncertain movement in broad range of 2-1.998level. Overall, central bank intervention and improvement of Trade and current account deficit Brazil Real likely to keep Real lower around 2 against US dollar. USD vs. VND Movement Vietnams government bonds fell, pushing the five-year yield to the highest level since May, after The yield on the five-year notes rose eight basis points, or 0.08 percentage point, to 10.23 percent, according to a daily fixing from banks compiled by Bloomberg. The dong traded at 20,890 per dollar as of 3:16 p.m. in Hanoi, unchanged from the end of last week, according to data compiled by Bloomberg. The State Bank of Vietnam set the currencys reference rate at 20,828, unchanged since Dec. 26, according to its website. The dong is allowed to trade as much as 1 percent on either side of the rate. Technically Vietnam dong likely to remain in range of 21000-20000 level.

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Indian Rupee Revival of Good Times

Debajit Saha, Content Editor, Bullion Bulletin Indian Rupee finally got out of stage of nemesis. It had lost long ago good days of a strong currency with economic downturn all over the world and unavoidable (or at times avoidable) macro-economic factors of domestic economy. Lack of economic reforms under colalition political pressure kept the central government out of path of reforms which otherwise could have saved the currency from its rapid downfall against US dollar. Neverthless, alls well that ends well. Central Government finally has taken series of bold steps which revitalizes the economic environment. Protectionist thus turns into saviour. Rupee performed best amongst all Asian currencies last quarter and most importatantly, last two weeks. Now the important question is it a reaction rally or rupee will continue to strengthen against dollar. We would focus on this in next paragraphs. Macro Economic Syndrome Advocates of Keynesian economics argue that private sector decisions sometimes lead to inefficient macroeconomic outcomes which require active policy responses by the public sector, particularly monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle. The term business cycle (or economic cycle) refers to economy-wide fluctuations in production or economic activity over several months or years. These fluctuations occur around a long-term growth trend, and typically involve shifts over time between periods of relatively rapid economic growth (an expansion or boom), and periods of relative stagnation or decline. )Wikipaedia The above theory is perfectly suited for emerging economies growth story. (It is necessary to focus on global parameters as India is exposed to global economic vulnerability same way other emerging economies are. China has grown only at the rate of little above 9% last year from whopping 12-13% in previous years. So current economic downturn in India is not the inefficiency of our economy but combination of both micro and macro economic fundamentals). We have grown at a brisk pace above 7.5% on an average till 2011. The economic reforms that were first undertaken way back in 1992 by the then Finance Minister and todays Prime Minister of the country Dr. Manmohan Singh and subsequent reforms that were carried on later by various governments pushed India to become worlds second fastest growing economy. But this growth was halted on theory of cyclical economic downturn (as inidcated above) in line with other emerging as well as developed economies. The condition of inefficient macroeconomic outcome, for example, can be justified in form of Indias high Current Account Deficit (CAD) or lets say, high inflation. Indias dependency on foreign market to source crude oil and peoples inclination to buy gold, which India imports 100% basis, coupled with low export

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growth resulted in high CAD. On the other hand, rapid growth or expansion of private sectors created high inflation. Central bank was forced to undertake tight monetary measures last year which is still continuing to counter this menace of inflation. This created huge liquidity shortage in financial market. Lack of fiscal reforms created void in the economy resulting in slow employment and infrastructure growth. The intervention of central governmet on fiscal front was a necessity. With the current reform announcements like allowing FDI in retail, aviation and insurance sectors along with curtailing subsidies in LPGs and hike in diesel prices in place, central bank may ponder over to losen the monetary

policy in near future now as central bank was constrantly stating that unless something coming from fiscal front, monetary policy can not be losened as inflation is still above the accepted level of 5-6%. Combinedly, all put enormous pressure on Rupee. Europes debt crisis also created additional demand for US dollar which indirectly impacted other currencies as well. With ECBs declaration of buying unlimited debts and Feds QE3 programme, some relief can be expected from global front. So, we could see much sronger currency in coming days. But, to see level of 45-46 against dollar, well, we have to wait longer period of time, perhaps.

Net FII Flows till September 2012 in Asian Countries (in $billion) FII Flow India 13.19 Phillipines 2.18 South Korea 12.81 Taiwan 1.54 Thailan 2.15 Vietnam 0.18

The above table is just indicative that global investors have not left India, rather placed better than its peers in Asia. Market is expecting more inflows into the country after the current reform measures. On the other hand, oil price in international market has come down substantially and possibily it would remain in comparatively lower level than last year for next quarter or two possibly keeping better than last years political unrest in Middle East and Africa and adequate global supply in mind. So, Indias oil bill might have improved in next couple of quarters which may ease substantial pressure on CAD. Governments continuous efforts to bring down the imports of gold is so far successful. But, taking the deficits below 3 percent of GDP from last years 4.2 of GDP, it will take substantial time.

Technicals:The chart is showing rupee is at 6 months high and getting resistance at 50 week EMA. MACD is showing negative divergence at a time when the currency has broken the resistance of 54.30 decisively. Combined, one can expect that rupee would continue to strenthen till 49 against US dollar. All it needs two consecutive weekly close below 50 week EMA level. Keep the fingers crossed!

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