Foreword
Dear readers,
Agriculture is a long-term investment that cycles over seasons and years. However, more and more, industries such as macadamias are supplying consumer markets with trends, preferences and aspirations with much quicker and varied cycles and dynamics. This makes marketing more important than ever before. In dynamic, internationalised markets which lack transparency, it can be difficult for farmers to understand and predict what factors influence their prices. On the other end of the supply chain, a lack of certainty of quality and volume can make it difficult for buyers to commit to forward contracts when trying to keep pace with increasingly discerning and fickle consumer markets.
A trading platform that brings transparency allows for better planning and supply, and the meeting of demand. For producers, goods bought and sold through a digital platform can offer greater and more detailed feedback from the market that offers improved opportunities to influence their farm-gate prices. Marketing feedback for farmers and their processors can go beyond occasional newspaper articles, farmers’ days, and AGMs, to include real-time market signals on a range of data points beyond price.
We are living in uncertain times which call for measures that add as much certainty as possible. This is our journey, and we invite you to join us. Engage with us so that we can tell you how we see the platform making this contribution.
We trust you’ll enjoy this week’s market review.
Latest macadamia transactions
The two graphs below compare the most recent five-week period (Weeks 20-24) with the five-week period that preceded it (Weeks 15-19).
Recent reported trades for whole styles saw a Style 0 transaction priced at US$14.00/kg CIF and a Style 1 transaction priced at US$13.50/kg CIF. The average price gap between Style 0 and Style 1 deals in observed transactions has narrowed with average Style 1 prices for the past five weeks now also sitting above US13.00/kg CIF.
NIS prices have remained steady with recent volumes concentrated in transactions for NIS 22+ sizes. The NIS 22+ category was also the one to show a significant increase in average prices of the past five weeks against the previous five-week period.
Market sentiment
South African and Australian harvests are slightly lower than expected but of a good quality, according to industry sources. This shows strong grower resilience despite rising costs and record-low prices over the past few seasons.
The overall balance in supply towards NIS sales from these two countries, however, has meant that the second quarter will likely not significantly alter the volume of kernel stocks available. Kernel stocks were already low at the start of the year after China’s NIS buying rally in late 2023. Kenya also almost completely switched to NIS sales this year after its government temporarily lifted a ban on unprocessed macadamia exports. Considering the possibility of low kernel stocks sustaining throughout the year, a European buyer recently encouraged its customers to “cover your positions”. Another buyer has noted reduced interest by suppliers in South Africa to conclude forward contracts for kernel as they presently focus on immediate NIS supply, while processors in Kenya are focused on securing sufficient kernel supply before making offers. As NIS prices in particular have been improved but stable for an extended period, this can give confidence to the market over sentiment expressed in 2023.
Meanwhile, meteorologists expect La Nina atmospheric conditions to develop during the third quarter. The La Nina phenomenon represents a cooling trend over the central and eastern tropical Pacific Ocean which has substantial global impacts on weather patterns, depending on its duration and intensity. It is the opposite of El Nino conditions, a warming trend which has prevailed over the past year. With relevance to macadamia growing regions, La Nina usually means drier conditions in the United States, Brazil, Kenya, and southern Vietnam while it can mean wetter conditions in Guatemala, South Africa, Mozambique, Zimbabwe, Zambia, Malawi, and eastern Australia. Much of China can be drier during La Nina, but the south of the country, where the macadamia-producing Yunnan province is, can experience wetter conditions. Generally, wetter conditions are better for agriculture unless extreme weather events cause crop damage and harvesting delays. An increase in the number and intensity of cyclones around Southern Africa and Australia is associated with La Nina periods. Meanwhile, Yunnan and parts of Vietnam are exposed to East Asia’s monsoon rains (lasting from June to October), which can become intensified under La Nina conditions.
Trade trends
China is the world’s biggest importer of NIS macadamias. But it is also increasingly an exporter of kernel macadamia products. For many years, most of China’s kernel exports were destined for Australia but since 2019 a significant proportion has also been exported to the US, Japan, and Italy.
In The News…
13 June 2024: La Nina weather 65% likely to develop in July-Sept, says US forecaster.
13 June 2024: El Niño is dead. Here’s what to expect in the coming months.
11 June 2024: Milkadamia Rolls Out New Organic Macadamia Nut Milk Nationwide Amid Rising Demand for Organic Products.
10 June 2024: Vietnam aims for new record with fruit and vegetable export.
10 June 2024: Kenyan macadamia nut production increases as demand grows.
7 June 2024: China reaffirms commitment to Zimbabwe agricultural investment.
7 June 2024: Global nuts market and crop update for May.
5 June 2024: Global In-Shell Macadamia Production Set To Near 340,000 Tons in 2024.
3 June 2024: El Niño is forecast to swing to La Niña later this year.