Dear valued readers,
International politics and weather patterns are making their presence felt in macadamia production and trade. Meanwhile, South Africa’s crop is arriving at handlers later than expected, and Guatemala’s crop has begun to enter the market. While there appears to be recovery in the kernel market – is the demand firm enough and at a price to cause handlers to commit greater volumes to processing? Uncertainty regularly accompanies international trade and export-oriented agriculture, while there is recognition that volatility in prices and supply affects downstream food processor interest in innovating with agricultural products. The MSM trading platform provides buyers and sellers with market signals, thereby enabling them to make decisions amidst uncertainty.
The platform enables a direction connection between suppliers and a diverse range of buyers. Transparency supported by data enables suppliers and buyers to make clear decisions, cutting a path to growth despite shifting global dynamics.
Latest Macadamia Transactions: 20 – 24 May 2024
Reported kernel trades this past week showed average price increases for whole styles while ingredient styles retained their average levels from the previous week. This assisted in average prices maintaining their upward trend when comparing the past five weeks of reported transactions (Weeks 17 to 21) against the earlier five week period (Weeks 12-16). The week’s observed transactions included more kernel product sourced from Guatemala as that country’s 2024 crop starts to enter the market.
There was an uptick in observed NIS transactions from South Africa. Average prices for the NIS 22+ size from all destinations in reported trades have increased earlier in the month before declining towards the end of May. Still, NIS 22+ prices averaged over the past five weeks (Weeks 17-21) were higher than the prior five-week period (Week12-16). Other sizes have retained their average price levels in observed transactions or have shown decline. The bulk of South Africa’s crop is yet to come in.
Market sentiment
Reported NIS transactions from the previous week suggest that South Africa’s order fulfilment to China is starting to accelerate. Trade data from the SA Revenue Service (available only to March this year) showed a definite uptick in NIS shipments in March against January and February. Data from MSM registered contracts concluded in April point to an acceleration NIS shipping from end-May/early June onwards. Jill Whyte of Green & Gold Macadamias was reported at the recent INC 2024 Congress as saying the South African industry was uneasy about the volumes of NIS being sold and the implications this had for kernel production. Kernel production, she said, is of greater long-term strategic importance to the industry. About 70% of South Africa’s exports went to NIS in 2023. At the same congress, it was highlighted that Australia’s industry had started shifting back towards a 70/30 split in favour of kernel this year after a 50/50 split in 2023. However, it would take beyond this year to return to 70% kernel production. The Australian Macadamia Society also noted that “world macadamia supply is expected to continue to grow at +/-10% per year over the next few years, signaling excellent opportunities for market expansion and product innovation with kernel, with the prospect of more stable pricing on the horizon.” However ,while the outlook favours kernel production, NIS sales dominate. Cheng Lu, from China’s CHK Trading, explained at the congress that the recent surge in NIS sales in his country was driven through promotions by online retailers. While younger Chinese consumers were favouring product innovation, he said, with NIS prices as they are it will remain the popular product.
At the congress, dry weather conditions were identified as having an impact on production in Guatemala, Brazil, and China. Meanwhile, recent floods in Kenya have destroyed 58 roads and 16 187 ha of cropland while causing loss of life, according to Farmers Weekly. The devastating weather events in Kenya add to uncertainties about kernel availability, although supply constraints may be alleviated by Guatemala’s crop coming to harvest over the next two to three months, depending on handler decisions for the kernel/NIS split.
Reports surfaced last week of China denying entry for macadamia shipments from Guatemala, which may play a role in these decisions should the prohibition sustain. In response to media enquiries about the incident, China’s foreign ministry spokesperson criticised Guatemala’s relationship to Taiwan saying that international recognition of the one-China principle was “the fundamental prerequisite for China to carry out co-operation with all countries including Guatemala”. The foreign ministry condemned Guatemala’s expression of support for Taiwan, saying “these moves trample on the one-China principle. We condemn those moves. Such situation is not conducive to the co-operation between Guatemala and China, including Guatemala’s export to China.” Gautemala’s export guild confirmed the event, saying Guatemala’s foreign ministry was assisting exporters with a “prompt solution”.
Strata Markets last week provided details of growing European and US interest in kernel products, which South Africa remains in a key position to fulfil if volumes are committed to processing.
Trade trends
Access to Chinese markets is prized by NIS exporters but is not presently an option for every country. A trade agency active in Mozambique’s macadamia growing Zambezia region lamented his country’s lack of direct access to China’s markets. The country exports through South Africa and through intermediaries in Hong Kong, adding to logistics costs.
The secretary of state for Mozambique’s Manica province complained, “The product leaves here for South Africa. This country then sends it to China and Europe as if it were a South African product, a situation that worries us. We need to let the world know that this product comes out of Mozambique.” According to online logistics magazine, Freight News, Mozambique is expecting to export 1,250mt of macadamias this year, up from 800mt last year.
In The News…
24 May 2024: Mozambique’s macadamia exports – a tough nut to crack.
24 May 2024: China bans Guatemala’s coffee and macadamia imports.
23 May 2024: Brazilian nut market is showing promising growth.
23 May 2024: MSM address burning questions.
19 May 2024: Australian almonds provide key ingredient to tap India’s youth through federal government trade deal.
18 May 2024: Farmers, regional council oppose Fox Resources’ push for coal exploration north of Bundaberg
17 May 2024: Round table recap: Global macadamia production updates shared at 2024 INC Congress
16 May 2024: A review of the macadamia nut sector in Zimbabwe [PDF]