Foreword
Dear readers,
Reading and timing the market is a vital skill for any agricultural supplier. In an industry such as macadamias where a substantial portion of a supplier’s volumes can be pre-sold months ahead of shipping, achieving accuracy in crop predictions is another vital component to successful supply. None of this is easy, and it highlights the risks of decision-making in agriculture. Recently we’ve seen downward crop revisions in a number of origin countries, while at the same time pre-selling of NIS products was very high this year. Based on a market reading informed by the difficulties of 2023, suppliers believed they needed to shift their marketing mix away from kernel processing towards shelled macadamia supply and to be well-sold as early as possible. In the face of lower production, a significant portion of the industry may now be over-committed on NIS, while kernel prices are showing increasing value but supply to these markets may be out of reach to some. The results can be felt downstream too where buyers become frustrated by price volatility and supply reliability as they try to service their own manufacturing, foodservice, and retail customers. A danger, particularly for kernel ingredient markets, is that downstream players substitute macadamias for competing nuts.
Ecommerce offers opportunities for suppliers to mitigate the complexities of risky early decisions.
The MSM digital trading platform brings buyers and sellers closer together in a single marketplace. Greater intelligence reduces risks and enables more informed decision-making. Information can flow up and down the value chain. The result is an industry that can better read the market despite the uncertainty of the future. We would love to explain more and show you how your business can position itself for the future through the MSM trading platform.
Reach out to us and let’s discuss.
Macadamia Price Trends
The two graphs below compare average prices in reported trades for the most recent five-week period (Weeks 27-31) with the five-week period that preceded it (Weeks 22-26). Apart from Style 1L, all styles are showing an increase in average prices between the two comparison periods. Shipping in most key kernel destination markets has begun to increase from May as early orders are fulfilled.
NIS prices are holding steady, with a slight decline in NIS 20-22 prices between the two comparison periods.
Market sentiment
SAMAC this week corrected its downward revision of the South African crop. It now expects the country’s production to reach 83,726mt (measured on an NIS basis, 1.5% moisture). The association is now only expecting a 7% decline on early season forecasts, which still represents an increase over 2023 production. This will be good news to those monitoring the market, as talk of shortages in supply is widespread. NIS intake by processors has been limited, making it difficult for some to fulfil commitments made earlier in the year. It also means a significant portion of the industry is not able to respond to kernel demand. Prices of kernel styles have strongly risen this year but offers to supply are relatively few. Meanwhile, developments in China’s domestic macadamia consumption (discussed in the MSM Monthly Market Report for July) have enabled buyers to keep a lid on NIS price increases.
While European traders report that lower prices for kernel products have stimulated consumer demand, inventories are being depleted and will now have to be restocked at higher prices. The timing of order fulfilment remains uncertain as suppliers wait out finalising their intakes before committing to new contracts. On the positive side for kernel markets, with the recovery of a larger kernel/NIS price spread this year, handlers will be increasingly incentivised to focus on processing what remains unsold. China and Vietnam’s harvests are timed for the last quarter of the year (together with early harvests from Kenya and Malawi a bit later), so it may mean that NIS price improvements will be limited going forward. If increased kernel supply is possible, this will assist in retaining shelf-space in retail stores (where supply is delayed, lost shelf-space can be difficult to regain later) and avoiding substitution in ingredient markets. It will also limit price increases reaching levels that buyers and consumers find unaffordable.
In The News…
30 July 2024: Ariston’s Sweet Pot: Tea Soars, Macadamia Powers Earnings in Q3.
29 July 2024: Global Macadamia Market Outlook for 2024.
29 July 2024: GoodSam unveils latest impact report highlighting ethical snack.