Foreword
Dear readers,
To a large extent, African and Australian macadamia suppliers are struggling to respond to new demand, particularly for kernel products. This is the result of a combination of extensive early NIS commitments, a drop in early Kenyan crop available for processing, and a smaller-than-expected crop in South Africa, Australia, and Malawi. While NIS supply has been favoured in contracts, kernel has shown the strongest price recovery, leaving many in the industry with a sub-optimal marketing mix that doesn’t take advantage of this year’s market movements. Certainly, the best was done with the information available at the time. But there is an opportunity now for the industry (including suppliers in Kenya, China, Vietnam, Guatemala, and the United States) to plan proactively and strategically for the season ahead.
A collaborative approach is key to the strategic approach, one that allows for greater transparency and real-time information sharing, and which enables stakeholders to foresee and collectively address crises. This can promote sustainability and growth across trade cycles. The MSM Trading Platform facilitates this kind of proactive management, including the ability to better pivot to take maximum advantage of the market with its current dynamics. For example, through the platform, the industry can in advance reflect its capacity to deliver NIS.
Responding market signals can then also be seen in advance, making price discovery easier. Suppliers can then pivot towards kernel production if needs be (also in advance) without bringing price or supply shocks to the market.
A trading platform which allows participants to assess risks and avoid panic reactions can foster sustainable rather than destructive responses to market fluctuations. Such a proactive approach is more vital than ever in today’s shifting global trade terrain. Can we discuss this further with you? Reach out to us and see how the MSM platform can benefit your business.
Macadamia Price Trends
The two graphs below compare the most recent five-week period (Weeks 25-29) with the five-week period that preceded it (Weeks 20-24). Average Kernel prices, especially for whole styles, continue to show an upward trend as suppliers are not able to respond fully to demand. While average Style 4L prices appear to be declining in the comparison periods, this is because highly priced trades in May have influenced the figures. Average Style 4L prices are showing steady organic growth in July over previous months. In periods like now when Style 1S is in short supply, the market looks to substitute with Style 4L.
Despite high demand, especially for NIS 20-22, overall average NIS prices remain flat between the comparison periods. Increased processing of NIS by Chinese importers as well as expectations of supply from China’s domestic crop in the final quarter of the year is keeping a lid on increases.
Market sentiment
In this past week, the South African macadamia industry officially confirmed what has been suspected for some time: the country’s harvest is less than was expected. Estimations by SAMAC suggest that this year’s crop will be slightly smaller than last year. The prospect of shortages, also from Kenya, Malawi, and Australia, has driven kernel prices up as buyers become more concerned with restoring inventories ahead of H2 2024’s retail trading.
Average NIS prices also increased in June in response to shortages, but these have flattened out again. Chinese buyers are banking on their country’s 2024 crop, expected in the final quarter of the year, to meet demand. Record low prices in 2023 also incentivised product innovation by wholesalers and retailers in that country to take advantage of emerging consumer taste for value-added macadamia products. In the past, 90% of macadamia consumption in China was limited to its New Year celebrations as NIS snacks. Earlier this year, the INC World Congress reported that this has dropped to 60% as younger consumers seek kernel and value-added products through the rest of the year. In taking on higher processing costs and chasing discount-loving Gen-Z consumers, buyers for the China market are also looking to keep supplier price increases down to fund these new markets.
On the positive side for suppliers, South Africa’s harvest is especially noted this year for its quality. With the rapid growth of China’s crop and domestic processing capabilities, imports may be used in the future only to supplement local supply. Therefore, the quality of product from grower countries will be critical in sustaining their NIS exports to China. Farmers will need to continue to pay close attention to orchard maintenance in this period to restore yields and advance quality. Introducing nut X-ray scanners will also lead to an improvement in the overall quality of exports. Intense pressure on growers in the past three seasons will have forced improvements in practice and process, including achieving efficiencies and adopting new technology. This may position farms well for operating at high quality in 2025 even with sub-optimal NIS prices. Developments in China’s domestic agriculture—the impact of which will be more clearly seen towards the end of the year—will also intensify the urgency for grower countries to develop strategies that diversify into kernel markets.
In The News…
20 July 2024: Macadamia: High value nut in global market [Uganda].
19 July 2024: Top Macadamia Nuts Exports & Imports by Country Plus Average Prices.
16 July 2024: Australian macadamia nuts are in their fruit-bearing stage in the southwest of Yunnan [China].
16 July 2024: New Giraf Macadamia milk range set to redefine the milk market.
11 July 2024: Research: Futureproofing the Aussie macadamia industry.