Dear readers,
The macadamia industry has undergone significant changes over the past four years. While much of the turbulence is beginning to settle, the introduction of the MSM online-trading platform promises further transformation. This platform, an independent and industry-owned hub for macadamia trade, aims to ease market entry and encourage participation, thereby stimulating demand and expanding the market.
The MSM trading platform will empower buyers and sellers with greater influence over price determination. Its transparent and real-time mechanisms will help achieve price equilibrium more efficiently, reducing volatility and narrowing the farm-to-retail price gap—essential conditions for stimulating demand and ensuring sustainability throughout the entire value chain.
Furthermore, the platform will enable the industry to expand its market reach and create new demand. By seamlessly and securely establishing a direct connection between suppliers and a diverse range of buyers—including brokers, wholesalers, value-add manufacturers, retailers, and retail outlets—via modern international e-commerce, it will open up new opportunities for growth.
Latest Macadamia Transactions: 5-Week Comparisons Ending 19 May 2024
This week’s average kernel prices contributed to the year-to-date upward trend. Observed transactions in Week 20 of 2024 included a Style 4L contract from Australia to Asia priced at US$12.02/kg CIF while a Style 2 contract from South Africa to Europe was priced at US$11.00/kg CIF, according to Strata Markets.
When comparing average kernel prices from combined transaction data by MSM and Strata Markets for Weeks 10 – 15 (04 March to 14 April) against Weeks 16 – 20 (15 April to 19 May), the rise in kernel prices is clearly visible. A greater number of transactions were reported in Weeks 10 – 15, while trade appears to be focused on Styles 0,1,2 and 4L.
Average NIS price movements between the two five-week periods have been muted and recovery limited to NIS22+ sales. This past week did have an NIS 22+ transaction from Australia achieving a price of US$4.00/kg while an NIS 25+ transaction from South Africa was sold for US$3.50/kg. The volume of reported trade has slowed considerably in the latter period.
Market sentiment
As the month progresses and the year takes shape, China appears set to strengthen its commanding position in shaping the global macadamia market and, with it, the fortunes of processors and producers in grower countries. China has increased demand for NIS products into 2024 but has so far kept price increases limited.
Price corrections in the past three years drove a sharp drop in kernel prices and reduced supply in 2023. Meanwhile, the second half of that year saw a surge in low-priced NIS purchases by China, clearing out supplier inventories that had built up. Kenya then lifted the ban on its macadamia industry’s NIS exports at the end of 2023. The flood of NIS from the country added to 2024’s global supply, already expected to be significantly up in volume from the previous year under restored Chinese interest.
The lifting of the ban has also led to reduced kernel production in Kenya this year, according to commodity buyer Olam, as many producers contracted their NIS directly to China. Favoured by the increased NIS supply in the context of the kernel downturn, China has been well positioned to keep a lid on NIS prices so far this year despite supplier expectations of a price recovery.
Meanwhile, demand for kernel products in Europe, the US, Asia, and the Middle East has been growing and prices have recovered more notably.
It is not clear to what extent this demand will be met this year because, a commodity trader in Europe points out, kernel availability is limited owing to low roll-over stocks and the increased NIS contracting to China. Olam also notes that both Australia and South Africa’s crop have been slow to come in this year causing medium processors to hold off on kernel contracts until sufficient NIS stocks have been secured. Processors in these countries are also competing for kernel stock against direct producer NIS exports to China.
If processors in grower countries are unable to take meaningful advantage of rising kernel prices, this will support China’s position to increase purchases of NIS products while limiting price increases. Speaking to Farmers’ Weekly earlier in 2024, Global Macadamias CEO Shane Hartman cautioned, “Meeting China’s demand for macadamias was positive for the industry last year as it helped to clear warehouse stocks. But over the long-term, South Africa needs to maintain a robust processing industry so that we are not over-reliant on a single market, which in the case of China, is increasingly becoming self-sufficient. We need to be able to service all markets, and that means having sufficient processing capacity of our own.”
Trade trends
Guatemala is an important contributor to global macadamia supply, achieving an export peak of 8,000mt in 2021.
Importantly, it has been a source of kernel products, averaging 1,300mt of kernel exports per year since 2013.
In earlier years, the volume of kernel and NIS exports were split evenly with the US, Japan, Netherlands, and Germany being important markets for Guatemala.
Since 2016, however, NIS supply to Hong Kong and later China and Vietnam have dominated exports, thereby limiting the growth of kernel exports. The value of kernel exports peaked in 2019 at US$26m but have declined since, while the value of NIS exports actually exceeded kernel for 2020 and 2021 (peaking that year at US$ 25m). Guatemala’s crop is harvested mid-year between June and September. Production is expected to grow by 3.4% over 2023.
Mozambique exported 3,316mt of NIS macadamias to South Africa in 2022 according to the SA Revenue Service. The country also exports to Vietnam, Hong Kong, and China. In addition to exporting to South Africa, Zambia also exports a limited amount to Malawi while Zimbabwe also exports to Mozambique (2022: 2,810mt) from which product is shipped through Beira. The US, Netherlands, Germany, and Vietnam are all important kernel markets for Malawi.
In The News…
15 May 2024: Lawmakers approve measure to enforce transparency within macadamia nut industry.
15 May 2024: Steering a data-driven course through choppy waters.
14 May 2024: Kakuzi Eyes Doubling Avocado and Macadamia Exports.
12 May 2024: Kenya seeks to strengthen trade ties at China expo.
09 May 2024: Macadamia industry struggles with genetic advance.
08 May 2024: Sector should brace itself for tumultuous times.
07 May 2024: RSG interview with Barend van der Schyff of Valley Macadamias.
06 May 2024: China’s strong demand clears South Africa’s inventory, macadamia prices may increase by 10-30%.