Foreword
Dear readers,
Transaction costs for suppliers and buyers in a market lacking transparency can be high. These transaction costs can be further raised when potential risks to international transactions are realised. In a shifting market characterised by volatility, unpredictability and uncertainty, the risk and cost of transactions increase. Earlier this year, there was a rush to secure NIS contracts. Now, dynamics have changed, and prioritising kernel markets is making increasing business sense. But what about in six to twelve months’ time? Finding new buyers or sellers, vetting them to cross trust-thresholds, securing fair market prices, securing favourable payment terms or the financing to manage the terms concluded, and having effective dispute resolution mechanisms in place. These and the many other elements of international transactions can be difficult to manage effectively as an individual buyer or seller.
Listing product or bids for product on the MSM trading platform can play a significant role in reducing both the costs and risks of transactions. Providing a level legal playing field with robust dispute mechanisms for transactions between pre-vetted buyers and sellers is a huge boost to trade. Through registering to trade on the platform, market players can track market signals and generate intelligence through aggregated data. Suppliers with limited marketing options provided through traditional ways of selling internationally can reach a wider set of buyers. The anonymous nature of listings, which also provide independent verification of food safety and quality assurance, keeps the focus on the product without geo-political perspectives and prejudices interfering with trade decisions.
Similarly, through bidding for product, buyers can test the market and generate a sense of how secure supply will be in the period ahead. Consumer markets can benefit from the platform through its ability to facilitate collaborative supply to meet demand. Through this, the platform’s product standardising mechanisms enable suppliers to remain independent businesses while still collaboratively reaching greater markets.
Reducing transaction costs and risks for buyers and sellers can stimulate demand for macadamias. It can lead to reduced retail prices without depressing supplier prices. The result can be expanding macadamia supply characterised by continuity, predictability, and collaboration.
The MSM trading platform is now equipped for both DNIS and kernel trade. Take advantage of the reduced risk and transaction cost of trading through the 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 28-32) with the five-week period that preceded it (Weeks 23-27). Average price trends retain their patterns from previous weekly comparisons with kernel prices in the last five weeks of observed transactions showing improvement over the previous period. Notably, average prices for Style 4L have broken US$10.00/kg CIF while both Style 1 and Style 1L are approaching US$15.00/kg CIF. NIS prices remain steady.
Market sentiment
The focus remains on the future as the industry prepares for new supply from Kenya, China, Vietnam, the United States and Malawi from the fourth quarter onwards. Based near the equator, Kenya’s growing conditions allow for early crop peak to be marketed around the conclusion of the first quarter and a second crop peak to be marketed in the early stages of the fourth quarter. China, Vietnam, and Hawaii reach mid-harvest in the final quarter of the year and some early crop from Malawi may be marketed towards the close of the year or early next year.
All these grower countries have processing capacity. There has been a strong recovery of kernel prices this year and a widening of the kernel/NIS price spread. Shelled macadamia prices have also been pushed up by limited stocks during 2024 as major players committed significant volumes of their H1 2024 crop in NIS forward contracts. Stock available for processing has also been limited through grower groups in various countries bypassing processors and selling their inshell stocks directly to Asia. Indications are that retailer inventories in markets such as Europe need replenishing and enquiries are expected to increase.
Greater kernel supply in the second half of the year will stabilise prices while putting upward pressure on smaller NIS sizes which might become less available when redirected towards kernel contracts. Some South African and Australian kernel stock may still be marketed in the period ahead.
Despite it looking positive for kernel supply, the trend is far from established. Kenya’s temporary lifting of the prohibition on unprocessed macadamia exports in 2023 meant a big shift away from kernel processing for the country’s industry earlier this year. Enjoying a farm-gate price boom, Kenyan farmers bypassed processors and sold NIS directly to China. Kenyan processors have built their businesses on the prohibition, which was introduced in 2009 and codified in law in 2018. It remains unclear to what extent they will access sufficient stocks for processing in the remainder of the marketing year ahead if the prohibition is not reinstated. Malawi exports kernel to the United States, but the market has been depressed since 2022. This leaves Malawi dependent on exporting product, and value, to South Africa’s suppliers. China and Vietnam’s kernel exports are expanding to key markets such as the US, Europe, Asia, and Australia—however, the growth of these two supplier countries’ kernel markets may increase global demand for NIS from other origin regions.
In The News…
11 August 2024: NARO, Amafh Farms Sign MoU to Boost Macadamia Production in Uganda.
8 August 2024: 5 Surprising facts about Australia’s 2 main macadamia growing regions.
7 August 2024: Half year macadamia exports reach US$4m, farmers demand higher prices [Zimbabwe].
2 August 2024: Pryspendulum nou in guns van gedopte makadamias [Afrikaans/Subscribers only].
2 August 2024: Cracking the nut: food processing automation at Freedom Fresh.
1 August 2024: Look, It’s Dairy Free! 8 of the Best Plant-Based Milk Alternatives for Kids.