Foreword
Dear readers,
In reporting on the macadamia roundtable seminar at the recent INC World Nut and Dried Fruit Congress, the Australian Macadamia Society highlighted concern expressed by the South African industry on the availability of stock for the kernel market. The AMS report commented: “With the total global macadamia kernel production significantly lower than that of competing nut industries, it’s important the global industry plans strategically and builds, rather than starves, the critically important long term kernel market.”
Given the intense cashflow, cost and margin pressures on producers and handlers over the past three years, it is not surprising that immediate solutions during 2024’s price and demand recovery have been sought in prioritising NIS markets. However, the call to strategically build the kernel market is probably one of the key requirements to ensure the sustainability of the macadamia industry. Inescapably, this is a collaborative exercise that requires the right tools and mechanisms to convince suppliers to commit to kernel production, especially given the attractiveness of NIS sales even at low prices. For a shift to occur, market participants need to be better able to assess risks in kernel supply and to foster productive, unpanicked reactions to market fluctuations. They need transparency and real-time access to market signals to foresee and address challenges across trade cycles. The MSM platform provides the means and mechanisms for such industry collaboration and the discovery of fundamental conditions necessary to implement a common strategy and realise a common goal that goes beyond short-termism and builds towards a sustainable future for the industry.
As you consider this week’s market review, consider also how the trading platform can assist the industry to strategically plan and to build the kernel market. We would love to engage with you to show you how we see it playing a critical part in developing a positive future for all in the industry.
Latest macadamia transactions
Reported transactions for Week 22 (27-31 May) capped off a month of price rises for kernel styles. The graph below, which effectively compares average prices observed in reported transactions for May (Weeks 18-22) versus April (Weeks 13-17), show particularly strong price increases for Style 1 and Style 4L.
Prices for larger NIS styles retained their levels this week as an increase in the number of transactions for NIS 22+ were observed.
Market sentiment
NIS prices did not rise in May despite expectations that the marketing of Australia and South Africa’s 2024 crop could reinforce this year’s price recovery. Later than usual harvests in both countries together with South African supplier decisions to pursue NIS transactions above kernel have kept average NIS 22+ prices below US$3.50/kg CIF. While this is still an improvement on last year’s average prices, an apparent urgency in cashflow recovery after a tough 2022 and 2023 maybe driving supplier interest in NIS rather than pursuing lucrative kernel markets. The latter have longer payment terms and higher costs for processors. There are also widespread reports of growers bypassing handlers to sell NIS directly to China as producers address their immediate business needs to recover from previous seasons’ low prices and high costs. Some industry voices are raising concern with the need for a more strategic and sustainable approach by South Africa that focuses on developing kernel markets. While it appears that short-term goals dominate in South Africa, the Australian industry is showing an earlier shift back to its traditional NIS/kernel marketing split. With Stratamarkets reporting that suppliers are already feeling “well sold” on kernel despite the increased demand at rising prices, it remains unclear if further crop will be committed to meet this demand this year or if NIS transactions will continue to be favoured.
Trade trends
Demand for kernel macadamia products in Germany has improved in Q1 2024 in comparison to the same periods in the previous two years. By the end of Q1 2024, Germany had received 381mt of kernel from South Africa, while 212mt had been received from Kenya, according to the Federal Statitical Office of Germany. By the end of Q1 2023, 196mt had been shipped from South Africa and 234mt from Kenya. By the end of Q1 2022, 256mt had been shipped from both South Africa and Kenya. Interestingly, about 124mt had been received from Malawi in Q1 2024 whereas that country had shipped virtually nothing in the equivalent quarter of 2022 and 2023. Kernel shipments to Germany typically peak between May/June and January the following year.
In The News…
1 June 2024: Kakuzi looks to revenue diversification with macadamia production
30 May 2024: South Africa’s agricultural trade surplus up 20% y/y in Q1, 2024
29 May 2024: Macadamia market recovery
27 May 2024: Macadamias: twisted sales
27 May 2024: International influencers embark on tour of Australian macadamia industry
27 May 2024: KNCCI market intelligence for export of macadamia
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