The cashew prices in India surged exponentially during 2024 due to a combination of factors, including increasing customer demand and rising raw cashew nut (RCN) in shell prices (~35%). The increase in RCN prices was primarily driven by supply shortages caused by lower global production and export restrictions imposed by key producing nations, particularly in West Africa.
Furthermore, the weakness in the Indian Rupee along with higher shipping costs further fuelled the production costs for Indian processors. On the domestic front, erratic rainfall and unusual weather patterns in key cashew-producing states like Kerala, Karnataka and Maharashtra impacted cashew yields, tightening supplies and pushing prices higher.
Over the last three years, the RCN in shell prices have fluctuated significantly. On average, the RCN prices were around Rs. 120/kg in FY2023, dropping to around Rs. 95 per kg in FY2024 and rebounding sharply to around Rs. 130/kg during the first nine months of FY2025, marking a substantial increase of ~35% from the previous year. Despite the sharp increase, the RCN prices are still below their 2018 highs!
Going forward, we expect the cashew kernel market in 2025 to remain volatile, with bullish bias given the early start of the harvesting season in Africa and promising crop yields. However, despite an expected good harvesting season, several recent developments in the Ivory Coast and Ghana, such as increasing farmgate prices and stricter controls on pricing, could impact RCN prices significantly.
Moreover, continued pressure on the Indian Rupee and rising shipping costs are likely to increase the domestic cost of production. We believe that strong and sustained domestic demand driven by increasingly health-conscious Indian consumers, coupled with seasonal spikes during weddings and festive seasons, would allow domestic cashew processors to pass on any cost increases amidst volatility. Similar to the current year, this pricing resilience is expected to cushion their profitability positively to a certain extent.
