NAIROBI, Nov 21 (Reuters) - The global price of cashew nuts has jumped nearly 10 percent over the past week, after Tanzania’s government started buying the entire country’s stock at a higher price, a trader said.
Growers of cashews, the most valuable export crop for the East African nation, had been holding back from selling after prices fell below what they said it cost them to produce.
President John Magufuli last week ordered a 94 percent increase in the domestic price to help the farmers and told the government to buy the estimated 220,000 tonne crop after private buyers balked at the higher price.
Army personnel have been ferrying truck loads of the crop purchased by the government to selected storage areas.
The price of the commodity has risen to $3.80 per pound from $3.50 in the last seven to ten days, said Michael Stevens, a commodities trader at Scotland-based Freeworld Trading.
Global kernel prices hit a high of $4.8 per pound at the beginning of the year, but as demand from the United States and Europe fell, they declined to $3.2 in October, an analyst at Cashewinfo, an India-based industry research organisation, said.
He said the price was currently around $3.8-3.9 per pound.
In the United States and Europe, cashew kernels compete with other nuts, like almonds and pistachios. With every increase in cashew prices relative to other nuts, its usage in snacks starts falling. Snacks account for over 60 percent of the demand for cashews, the analyst said.
Traders said they were assessing how Tanzania, a top ten global producer, would be able to get its cashews to the main buyers in India and Vietnam before the end of the year, after which harvests from other producers in South and West Africa will start to come into the market.
“Between now and then, it’s not clear what the price will be. If buyers think the price will continue to go up then they might come in and buy,” Stevens said.
“Some of the smaller packers may just close early and not be able to afford the price of raw seeds that’s been quoted,” he said. (Reporting by Omar Mohammed; Editing by Duncan Miriri and Mark Potter)