Averaging Price vs Drying Loss — What Most Factories Miss
In fresh cashew buying (Vietnam / Cambodia), most mistakes don’t come from price.
They come from misunderstanding averaging and drying loss.
At the beginning of the crop:
Supply is limited. Buyers want position. Price moves up.
Mid-season:
Supply increases. Buyers have more options. Price comes down.
That part is normal. The problem starts after that.
When factories buy high early, the common thinking is simple:
“Buy lower later to average down.”
Sounds reasonable. But it ignores one key factor.
Drying loss is not constant.
Early season:
High moisture, more rain, fresh nuts heavier.
Drying loss: around 17–18%.
Mid to late season:
Less rain, better sun, drier nuts.
Drying loss: below 15%.
This changes everything.
Same purchase price does not mean same real cost.
Early buying:
High price + high loss → cost increases sharply.
Later buying:
Lower price + lower loss → cost drops more than expected.
So the issue is not just price difference.
It is the effective cost after drying.
Most factories calculate averaging based on purchase price.
But the real number should be:
Cost after drying.
If not, what looks like averaging
is actually mixing different cost layers together.
One high-cost layer.
One lower-cost layer.
The result is not optimized. It is diluted.
The right question is not:
“Can I average down my price?”
It is:
What is the real loss at each stage?
What is the cost after drying?
What happens when I combine these batches?
In practice, drying loss is not a detail.
It is a core variable.
Ignore it, and every averaging strategy becomes unreliable.
Final thought
Averaging is not wrong.
Averaging based on incomplete data is.
CTA
If you are buying fresh nuts or RCN and want to understand real cost after drying or processing, feel free to reach out.
If you have WW320, WW240, WS or LP to offer, I can connect you with active buyers.
Disclaimer
This note reflects market observation and practical experience.
Actual results vary depending on weather, origin, and processing conditions.
Further Reading
This perspective is part of a broader thinking framework on how to operate in volatile agricultural markets.
If you want to understand deeper:
How to control cost structure
How to align cash flow with trading decisions
How to build a resilient trading system
You can explore more in my writing on agricultural trading operating systems.
Because in this business, survival is not about price
it is about how your system responds to uncertainty