MSM Market Report: 3 – 7 June 2024 | Week 23

Foreword

Dear readers,

For consumer food, cosmetics, and health product suppliers to respond to noticeable changes in purchasing patterns and consumer aspirations, they need advanced knowledge of supply and pricing of products. As young as the grower industry is, macadamias are one of the identified superfoods with enormous growth potential. Turning this potential into reality requires careful management of information and signals along the value chain. What can downstream innovators expect of production quality, price trends, food safety and grower commitment to sustainable practice? What can upstream growers and handlers learn about emerging consumer patterns to position supply appropriately? A digital trading platform can institutionalise multiple data points to provide information flows, transparency and predictability that can accelerate investment up and down the value chain. Trading platforms offer unparalleled opportunity for market information that advances product innovation and stimulates demand. Transaction costs for buyers and sellers alike are reduced while risks are managed through vetting and contract processes that bring assurance to trading partners. Importantly, real-time market intelligence can also shorten response times to market changes.

We can see even from this week’s market review that decisions made six months ago can seem outdated in a global macadamia market with so many dynamics in it. The MSM trading platform can strengthen all market participants’ capacity to deal with uncertainty.

Latest macadamia transactions

Reported trades this week for whole kernel styles comfortably exceeded US$13.00/kg CIF adding to the upward trajectory in average prices observed this year. Trading for NIS was thinner this week. While average prices in observed transactions did push upward slightly, the overall trend remains flat, especially for smaller sizes. The graphs below consider the trends in observed transactions over the most recent five-week period (Weeks 19-23) versus the five-week period prior to that (Weeks 14-18). Kernel trade volumes in reported transactions are concentrated in Style 1 and Style 4L lines. Meanwhile trade volumes in the past five weeks have been concentrated in the NIS 22+ size.

Market sentiment

Freak weather conditions in KwaZulu-Natal last week led to extensive building and crop damage along South Africa’s east coast, an important macadamia producing region. The South African Weather Service reports that at the beginning of June at least two tornadoes ripped through the area north of Durban and KZN inland, followed by disruptive rains, resulting in the death of 12 people and displacing 1,200. KZN’s extreme weather events occurred after flooding in the neighbouring Eastern Cape province that killed seven people. Sugarcane and macadamia farmers along the coast have been severely affected, leading to questions as to whether South Africa will achieve its expected macadamia production figures this year. Kenya’s agriculture was also hit by severe flooding earlier this year while emerging macadamia producers Zambia, Malawi and Zimbabwe all faced drought conditions this year, affecting crops.

Meanwhile, Stratamarkets reports that sustained flat pricing trends for smaller NIS sizes have now led to processor decisions to crack nuts below 22cm to take advantage of rising ingredient style kernel prices amidst growing demand from the US, Europe, the Middle East and South Korea.

Average prices for Style 4 in reported trades were placed at US$7.35/kg CIF in the second week of March but rose to US$8.90/kg CIF by the beginning of June. By contrast, average NIS 20-22 prices observed in reported trades have stayed at around US$2.50/kg CIF for the same period. Prices for whole styles in reported transactions have performed even better. Style 1 prices rose an average of US$2.00/kg CIF over the period.

Kernel macadamia markets are developing with intensified consumer education, effective promotional campaigns by local retailers in Europe and China, resulting in a recovery of demand in key markets this year. A growing percentage of China’s global NIS demand is reserved for local cracking to service emerging demand from younger Chinese consumers for kernel and value-added products. A notable shift by processors towards committing more product to kernel and other value-added markets could improve NIS prices while keeping kernel price rises at sustainable levels.

Trade trends

First introduced in the 1930s, macadamias have been commercially cultivated in Brazil since the 1980s. They are mostly grown along the southeastern coast from the State of Sao Paulo northwards to the State of Bahia. Brazil is a significant source of tree nuts. Cashews and Brazil nuts are native to the country while it is also an important pecan nut supplier. There are around 8,000ha of macadamias planted in the country, mainly grown by small and medium producers.

The majority of the crop goes to NIS production (about 6,000ha). Harvesting peaks at a similar time to South Africa and Australia. Interestingly domestic consumption has been increasing off the back of consumer demand for healthy eating, and in 2022 accounted for 32% of total macadamia sales for the Brazilian industry. Macadamia production has been growing, attracting coffee growers in search of improved profitability to switch over to macadamias. However, drought conditions this year have hampered production with reports suggesting a possible 15% in output as a result.

In The News…

10 June 2024: Vietnam aims for new record with fruit and vegetable export.

10 June 2024: Kenyan macadamia nut production increases as demand grows.

7 June 2024: Global nuts market and crop update for May.

6 June 2024: The Visionary Minds Exporting Kenya’s Priciest Nuts.

5 June 2024: Global In-Shell Macadamia Production Set To Near 340,000 Tons in 2024.

4 June 2024: Outlook for Australian crops 2024/25

4 June 2024: Ariston Moves to Improve Macadamia Exports Quality.

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