Dear Readers,
As we prepare for the upcoming season, we’ve been pleased to observe the notable rise in kernel prices, coupled with growing demand from traditional markets. This promising trend signals a strong start for what’s to come. We are also excited to announce that Kenyan suppliers have begun listing their kernel products on the MSM trading platform, just in time for Kenya’s 2024 “second crop.” This development presents a visible increase in the channels through which kernel becomes available, and for the first time, on a collective “kernel footprint” basis as we move towards the 2025 season. We encourage you to explore these offerings on the MSM platform, which are expected to grow substantially in the coming months, ensuring the market is well-prepared for a surge in supply to match the increase in demand at favourable prices.
With the significant gap between farm gate and retail kernel prices globally, it is of utmost importance for processing facilities to operate at full capacity to take advantage of the higher yield available on value-added product. The increasing demand for kernels, paired with favourable price spreads, presents a remarkable opportunity for processors, traders and retailers to profit and enhance overall market performance.
However, supply uncertainty continues to challenge buyers, particularly in traditional kernel markets. Despite their willingness to pay a premium to secure stock, buyer confidence is undermined by price volatility and the inconsistent availability of kernels. This is where the MSM platform steps in, offering an ideal solution. Our platform enables suppliers to list kernel availability ahead of time and secure contracts with transparency around volumes, pricing, and market trends. This collaborative approach empowers both traditional buyers and emerging markets to operate in a more stable environment. Moreover, it allows processors to avoid over-committing on low-yield NIS contracts, while capitalizing on more profitable kernel contracts—helping them to avoid defaults and ensuring more reliable market transactions.
We are pleased to see growing interest in the platform’s ability to accommodate the expanding crop size and support the necessary infrastructure to meet the needs of today’s health-conscious snack consumers.
We hope you enjoy reading our September monthly report and look forward to sharing more updates with you soon. If you’re not receiving our emails straight to your inbox, subscribe to our reports with this form. Previous reports are available on our website.
MSM is in Europe for most of October
We’re looking forward to seeing many of you. Please contact us if we did not book an appointment with you yet.
Overview
With the southern hemisphere 2024 production season done and dusted, and most contracts fulfilled, it is the turn of northern hemisphere origin countries to supply the globe. Chief among these now are Kenya (which enjoys two harvests per year given its proximity to the equator), Guatemala and China. Each of these countries showed a spike in kernel shipping to the US in July as commitments began to be fulfilled. Towards the end of the year, they will be joined by Malawi and Hawaii harvests.
Kenya’s strong showing in kernel shipping (to July) and in reported offers and trades into September is encouraging given the disruption the country’s processors have experienced in accessing sufficient stock this year. After the Kenyan government temporarily ended the prohibition on unprocessed exports, many producers traded directly with Chinese brokers to export NIS at improved farm-gate prices. In September the government extended permission for NIS exports by another six months, trying to find the balance between improved prices for farmers and retaining important global markets for processors. Kenya is currently at the height of its late-season harvest, fulfilling commitments to the US, Europe, Japan, China, and other markets.
| Mixed Container Offers from Kenya available on the MSM Trading Platform | ||
| Style | Quantity | Avg Price |
| 0 | 1530.9 | 14.3 |
| 1L | 47457.9 | |
| 1S | 30618 | |
| 4L | 18370.8 | |
| 4S | 70591.5 | |
| 5 | 1530.9 | |
Meanwhile, China’s Yunnan and Guangxi provinces have started their harvests in earnest. Lincang, a city in Yunnan, is at the heart of the world’s biggest grower region, according to Produce Report. The city itself cultivates 175,180 hectares of macadamias while production in the province includes farms in a further 71 towns. This farming is supported by 31 processors. Macadamia production in the Guangxi province is centred around the city of Chongzuo, with regional plantings of 41,900 hectares, according to the Specialized Committee for Nuts and Dry Fruits of the China National Food Industry Association. Nineteen processors are located around the city. Despite the size of macadamia plantings, China’s production is still short of its potential and the quality of nuts remains an issue. This means the country is still dependent on import of macadamia nuts.
However, China’s domestic demand for macadamia nut products is rapidly evolving.
A recent nut market insights and technology conference held in Zhengzhou noted that the low technological threshold for wholesale and retail has resulted in decentralised competition. The diversified nature of nut consumption and adoption of multiple channels of marketing (with growing ecommerce popularity) has also assisted in creating low concentration in supply. The entrance of these many players vying for consumers’ attention has put downward pressure on consumer prices and forced brand building on premium nut products. The conference highlighted the importance of flavour and taste diversification in securing nut sales. Internet trending or viral sensations driven by online influencers (causing products to achieve “net red” status) are playing a key role in consumer preference for high-quality, innovative, novel nut flavours. This reshaping of China’s macadamia nut consumption will affect the growth path of its cultivation and processing industries as it seeks increased volumes of quality produce at lower prices.
Immediate Outlook
While the northern hemisphere looks to fulfil commitments made this year, the global industry will have its eye on the 2025 marketing season. The next few months will bring clarity on the balance of forces between supply and demand, and how this affects price trends. There are, however, some features to production and consumption that are already becoming clear.
First, the global market is characterised by shortages. This will place suppliers in a stronger position next year than at the beginning of this year. Suppliers will be slower to make commitments for 2025 while buyers will already be seeking commitments. This will help sustain prices realised in 2024.
Second, global supply didn’t increase to the extent forecast. Adverse weather conditions played a major role in this outcome. It meant that the extent of shortages now experienced has come as a bit of a surprise. Global supply is expected to increase as recently planted orchards around the world mature and become fruit-bearing if forecasting is accurate. The improved producer prices experienced in 2024 will assist growers in orchard management and preparation for the 2025 crop—something that has been difficult for farmers in the prior seasons. This could assist in boosting yield and production in 2025.
Third, low prices in 2022 and 2023 have stimulated demand for macadamias in 2024. Along with this, there has been an acceleration in innovation and the development of value-added products containing macadamias. Even the US market, which has been flat in its demand for the past two years is showing signs of recovery. China’s own domestic demand is changing, resulting in increased demand by the food industry for macadamia kernel. China may well be the world’s largest NIS importer, but a greater percentage of Chinese consumers are no longer snacking on NIS. Instead, imported NIS is being locally processed to meet new demand for value-added products containing kernel. This could result in NIS prices remaining steady into 2025 despite growing demand while kernel prices rise. The urgency is growing for processors around the world to access high-quality NIS and then to develop sufficient capacity to process kernel and take advantage of market trends.
Reserving a greater proportion of growing supply in 2024/2025 to meet recovering global kernel demand will assist suppliers in maximising opportunities that lie ahead without losing important Chinese NIS orders. In all of this, the need to get quality and yield right is paramount.
Trade Trends
Global macadamia trade continues to develop, and sources of supply continue to expand. Mozambique recently announced it had secured an agreement to supply China directly. Rapidly growing in macadamia cultivation, Mozambique has until now only had access to international markets via South Africa. At the same time, Zimbabwe secured a protocol for phytosanitary requirements for the export of avocadoes to China. This important step is expected to result in a similar agreement for macadamias in the near future, which will boost trade. Brazil also announced similar sanitary approvals with South Korea, Angola, the UK, and Australia securing their export of macadamia nuts to these destinations.
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 lag by some months, so trends will only become clearer as this year progresses.
Both trade volumes and values compare favourably or are an improvement on, the same period last year for most markets. Unit values of imports (US$/kg) for July 2024 improved for South Korea, Japan, the UK, China, and the Netherlands, reflecting improved pricing trends. There was a significant spike in volumes imported to the US and South Korea in July 2024, bucking the trend of previous years. A recovery in US demand, in particular, will be a major positive for the global macadamia industry.
