Dear Readers,
Welcome to the August edition of our MSM Monthly Market Report. These monthly reports give a broader summary view of market dynamics to complement the weekly reports we release. The weekly market reports and updates help you stay ahead of the curve with timely, easy-to-consume updates. All in all, our reports seek to uncover the latest trends, developments, and market insights shaping the world of macadamias. Our commitment to keeping you informed remains steadfast.
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Overview
Trading in August was thin in what is traditionally a quiet month for the macadamia industry; meeting of commitments and shipping of orders was the focus of the day. It was also a wait-and-see month in which industry players listened for news of China’s harvest to see which way the market would move in the second half of the year. Reports started emerging that China will produce less than expected this year.
This development will tip the balance of forces in favour of international NIS suppliers. Having enjoyed purchases at lower prices in 2023 when handlers around the world had excess stock, NIS buyers now face the prospect of insufficient supply to meet demand as New Year celebrations rapidly approach. Chinese consumer demand for macadamias continues to rise on the back of the adoption of healthier lifestyles. According to a new joint report by the China Chamber of Commerce for Import and Export of Foodstuffs, Native Produce and Animal By-Products together with the Almond Board of California, 60% of consumers favour nuts and seeds above fruit, vegetables, dairy, and meat in their healthy snacking.
This trend is particularly being driven by younger consumers. Within choices for roasted snacks, demand is shifting from seed nuts to tree nuts (which constituted 8% of roasted snack consumption in 2013 and 15% in 2020). The country’s nuts and roasted seed snacking market is growing at 8% per annum and is expected to reach US$222bn by 2026. It has been showing innovative product development of late.
Average prices for NIS sizes began to increase again from August, possibly in response to changing market sentiment. If early reports of a smaller Chinese harvest prove true, this will force prices up further towards the end of the year. There is growing pressure by Kenyan farmers for their government to permanently do away with the ban on the export of unprocessed nuts (the prohibition was temporarily lifted in late 2023 to assist farmers in finding new markets for their nuts in the face of large unsold surpluses, leading a strong rise in farm-gate prices). The permanent lifting of the ban will boost NIS supply.
Average kernel prices in reported transactions stabilised from the strong growth they’ve displayed throughout the year, possibly as some commitments were fulfilled by processors as they completed their NIS trading.
Immediate Outlook
Matters have changed quickly from the NIS buyers’ market that faced grower countries at the beginning of the year. If August price trends continue, suppliers will become confident of a stronger start to 2025’s sales and marketing, and manage early commitments on better terms. Suppliers who managed to hold on to 2024 NIS stock to time the market, will feel justified in waiting out this long into the year.
A question remains as to what this does to the outlook for kernel trade. The year started with low kernel inventories as suppliers made substantial commitments to NIS buyers. Continued low stocks will boost demand as there are some reports that Europe’s retailers are not covered for the 2025 season. But will there be sufficient supply? The recovery of the NIS prices will keep processors in strong competition with direct marketing brokers. This competition has hit Kenya the hardest. With the ban on unprocessed nuts temporarily lifted, farmers rushed to sell NIS to international brokers at higher prices. However, widespread reports reveal that these brokers only accepted nuts from grafted trees and used X-ray machines to weed out inferior nuts before purchase. This resulted in processors having to pay elevated prices for nuts but only being able to choose from what was left of farm supply: nuts from unimproved trees and rejected nuts. The processing of these lower-quality nuts (at lower volumes) raised processing costs and reduced revenues. Without the return of the prohibition, Kenya, one of the world’s most important kernel suppliers, may not be able to contribute significantly to kernel supply in 2025.
Other global players could take up the market share left by Kenya if they use growing global production for a more even NIS/kernel marketing split.
Trade Trends
The graphs below superimpose import volume and import value timelines for key macadamia nut markets for the past 20 months. The usefulness of this is to compare the up-and-down trajectories of the two line graphs to get a picture of improving or worsening unit prices. Where value has a more intensive decline than volume, or where value increases are lower than volume increases, this suggests downward price pressure.
Publication of trade statistics lags by some months, so trends will only become clearer as this year progresses. For the two most recent months, almost all graphs show value rising faster than volume (or declining slower than volume), suggesting better supplier prices. Shipping to most markets has begun to increase after trade cycles bottomed out in March to May 2024. Most markets are showing an improved trade value (US$/kg) for June 2024. Macadamia imports by the US and Netherlands remain subdued.
