Raw cashew prices increased by 50%, leaving cashew businesses frustrated due to breached contracts.

Dependent on imported raw materials for up to 90%, Vietnamese cashew processing factories are on edge as partners back out of agreements and fail to deliver.

On the evening of May 31, the Vietnam Cashew Association (Vinacas) held a press conference to discuss recent market fluctuations in the cashew industry.

According to Mr. Nguy?n Minh H?a, Vice Chairman of Vinacas, the association has recently received complaints from its members about not receiving the full quantity of raw materials from partners in West African countries amidst a sharp increase in raw cashew prices. Annually, Vietnam imports over 3 million tons of raw cashews, with about 2.2 million tons coming from Africa (mainly West Africa). Domestic supply accounts for only about 10%.

In February, the price of raw cashews was around 1,000 – 1,050 USD per ton, but by May, it had risen to 1,500 – 1,550 USD per ton. As a result, exporters have sought to delay deliveries and demand price increases, with preliminary statistics showing that only about 50% of the contracted quantity has been delivered. "Typically, when companies purchase raw cashews, they sign corresponding export contracts for processed cashews based on the raw material price. Given the current volatility in raw material prices, there will be many contract disputes between Vietnamese companies and importers from the end of the third quarter this year due to the high costs, and many companies will be unable to fulfill their signed contracts," Mr. H?a predicted.

The increase in raw cashew prices is attributed to a poor harvest in West Africa, with an estimated decrease of around 7%, and certain countries, such as Ivory Coast, implementing policies to temporarily halt raw cashew exports to support domestic cashew processing factories.

Mr. T? Quang Huyên, Chairman and CEO of Hoàng S?n I Joint Stock Company, a leading export company, stated that in 2024, they signed contracts to purchase 52,000 tons of raw cashews from West Africa but only received 25,000 tons at the agreed price. About 12,000 tons were defaulted on, and the remainder was received at increased prices.

"Some foreign partners are taking advantage of Vietnamese businesses, forcing them to buy at higher prices or withholding documents, preventing them from obtaining the goods," Mr. Huyên said.

To respond to the situation, Mr. Huyên stated that he, along with Vinacas, will compile a list of unreliable partners to collectively boycott them. Partners who intentionally breach contracts will be taken to court, and the legal rulings will be enforced.

Mr. Cao Thúc Uy, CEO of Cao Phát Co., Ltd., added that in his 20 years in the cashew business, he has never seen raw cashew prices increase by 400 USD per ton in just one month, leaving them unable to respond in time.

"Usually, we sign export contracts 6-12 months in advance and have never faced such a raw material shortage as we do now. The export prices have not increased in proportion to the input material prices, making it very difficult for us to maintain our credibility," Mr. Uy said.

Mr. B?ch Khánh Nh?t, Executive Vice Chairman of Vinacas, stated that Vinacas will submit a proposal to the government and relevant ministries to address the challenges facing the cashew industry, including influencing African countries to lift the ban on raw cashew exports. With the Ministry of Agriculture and Rural Development, Vinacas will propose to focus on developing cashew growing areas and high-quality, high-yield cashew varieties. This will help cashew processors reduce their dependence on imports and avoid being exploited.

Previously, Vinacas had also sent a document to the Ivory Coast Cashew Exporters Association, requesting them to remind their members and export companies to fulfill their signed contracts.

According to the Nguoi Lao Dong newspaper