MSM Market Report 22-26 April 2024

Latest macadamia transactions: 22-26 April 2024

Kernel products showed steady price increases for much of the month but the last trading week of April saw lower prices for some styles. Compared to March, Style 0, Style 1S, Style 2, Style 4, Style 4L and Style 5 all showed a month-on-month increase by the end of April. Style 0 reached US$13.50/kg CIF this week, while Style 4L reached US$8.75/kg CIF this week.

Except for the larger sizes, NIS prices declined this week compared to previous weeks in April. Trading was thin, with observed transactions mostly focused on NIS 22+ sizes. Despite the price declines observed, this month’s prices for all sizes still showed an increase over prices observed in March.

Market sentiment

As kernel prices climb while NIS price increases remain muted into 2024, handlers will weigh up processing harvested nuts against exporting them as NIS. Stratamarkets reports that increased European demand for kernel products at the right price will favour suppliers from Kenya, Malawi, and South Africa over Australia, who have already committed volumes of NIS to China early this year. During big price drops over the past two years, similar to most other grower countries, Australia increased its NIS exports while reducing kernel exports, showing the strength of returns in unprocessed exports over processed nuts even when prices are low. Global kernel stocks are likely to be low for the year, so African handlers will be closely monitoring European prices to discern the opportunities for lucrative exports that may open up.

Meanwhile, low farmgate prices offered by handlers in the last two years have enticed some farmers to by-pass them and co-operatively sell NIS stock directly to Chinese buyers. This year, Australian handlers’ notional offers of Aus$3.00/kg or slightly higher are a big improvement over 2023’s average producer prices. However, farmers in that country believe farmgate prices exceeding Aus$4.00/kg, last seen in 2022, are necessary for their profitability. Ongoing farmer price concerns may prompt further direct marketing efforts or lead them to choose NIS-exporting handlers which can offer more preferable cashflow terms than kernel exporters will.

Trade Trends

Australia is a major producer and exporter of macadamia nuts. Similar to China and the USA, it is both a grower country and a market for macadamia products. It is reported that Australia exports 70% of its macadamias while consuming the rest locally, mostly as kernel and value-added products. China has become an increasingly important destination for Australian macadamia exports in recent years. According to Trade Map, in 2022, China and Hong Kong accounted for 45.3% of the volume of Australia’s kernel exports (down to 31.6% in 2023) against 23.3% in 2017. Japan and the USA are also key destination markets for Australian kernels while South Korea has become more important since 2021. In 2023, China and Hong Kong accounted for 84.0% of the volume of Australia’s NIS exports against 64.7% in 2017. The rest of Australia’s NIS exports go to Vietnam.

Price drops in the last three years have seen Australian handlers opt for NIS exports to China above kernel products. Reduced availability of kernel stock in Australia’s domestic market has opened opportunity for Chinese kernel imports, which have increased since 2019, according to Chinese export customs data. Between 2014 and 2018, Australia imported an average of 1,298t per year in shelled macadamias from China. Between 2019 and 2023, this had increased to an average of 1,705t per year.