How Vietnam's Record Cashew Exports in March Fail to Signal a Demand Recovery

In March, Vietnam achieved the highest monthly cashew kernel exports in 16 months, totaling 50,794 metric tons, and also set a new record for the month of March. While this achievement is notable, it's important to temper optimism about a demand recovery in the cashew market with a broader perspective. The record monthly exports were driven by several factors:

Buyers Making Use of Low Prices

Prices are low and importers are making use of these prices to top up their inventories, and these increased imports are not directly correlated to consumer demand. According to the VINACAS, the FOB price in March was USD 3.09/lbs which are still far below the average of 2022, of USD 3.13/lbs. Prices should trend sideways at these low levels, as importers could continue to buy the dips and stay on the sidelines when prices increase.

Export Seasonality, Earlier Lunar Celebrations

Cashew kernels are exported year-round, but generally, peak exports also coincide with the seasonality of major producing countries. There is normally a sharp drop in exports in February, due to the Lunar New Year celebrations. Most celebrations following the Lunar calendar were and are earlier in 2023, and the Lunar New Year fell on January 22nd, the earliest date since 2004. This meant that exports were low in January 2023, but soared in the following months. Ramadan was celebrated from Mar 22nd - Apr 21st in 2023, earlier than in 2022 (Apr 1st - May 1st) and 2021 (Apr 12th - May 12th), adding earlier higher exports from Vietnam.

Source: VINACAS, Vietnam Customs

Increased Exports to Middle Eastern Transit Countries

Vietnam's exports to Asian countries and the Middle East increased in March 2023 compared to the same period last year. In particular, exports to China surged by 60% to 4,015 metric tons (mt), which indicates a recovering demand. However, this is still below the long-term monthly average of 4,950 mt. There was also a significant rise in exports to the UAE and Turkiye, which function as transit countries for cashews. Year-on-year, exports to the UAE in March increased by 50% to 1,477 mt, while exports to Turkiye soared by 192% to 1,250 mt. These increases suggest that the record exports from Vietnam were intended to replenish stocks rather than being driven by strong consumer demand.

Source: VINACAS

Any recovery in cashew consumption is primarily seen in non-traditional markets - a trend observed across most nuts. The Middle East has emerged as one of the fastest-growing export destinations for cashews and other nuts. While the US and Europe traditionally represent the largest destinations for cashew kernels, they have not experienced a significant demand recovery. It is worth noting that India remains a standout importer of cashew nuts, having imported 1.35 million metric tons (mt) of in-shell cashews in 2022, representing a massive 57% YoY increase. In the short term, the Middle East and Asia are expected to continue being lucrative markets for cashews. Still, until the US and Europe start importing larger volumes, global cashew inventories continue to grow. Despite Vietnam's record cashew kernel exports in March 2023, the industry still faces challenges in rebalancing supply and demand