Overview
Observed transactions in macadamia trade for April show an arrest in the price declines of the previous three years and confirm expectations that 2024 will see a price recovery for both kernel and NIS categories.
March and April are typically quiet months for macadamia trade as Chinese demand drops off after that country’s new year’s celebrations at the end of January or early February. China is the key driver of annual demand for NIS products, with shipping peaking from September to January. This year, March and April have been defined by bargain hunting as Chinese buyers seek lower NIS prices for the high demand period ahead. Early 2024 season prices have also been influenced downwards by a greater volume of NIS products being available from Kenya after its government temporarily lifted a ban on the export of unprocessed macadamia nuts late last year. However, as Chinese buyers purchased virtually all rollover stock from grower countries in late 2023, there is currently limited product on the market leading to supplier expectations that they can return to more sustainable prices, last seen in 2022 and before. With Kenya and Malawi’s 2024 harvests hitting the market in the first quarter of the year, a price gap between whole kernel styles and ingredient styles (especially Style 4 and Style 4L) has been observed. European demand for whole kernels is showing signs of recovery, leading to improved prices for Styles 0,1, and 2. Shipping of kernel products to Europe usually peaks in the third quarter of each year.
Market observers remain concerned that price increases don’t deter demand recovery after four tough years for producers. The industry also has an eye on innovation by food and cosmetics manufacturers key to creating demand for macadamia products, which has accelerated under last year’s low prices but may reduce with upward price movements.
Kernel price trends
Transaction data derived from Stratamarkets shows that Style 0 prices for the month of April have averaged US$13.25/kg CIF. Meanwhile, Style 1 transactions have exceeded an average of US$11/kg CIF. Compared to March, average price increases into April were strongest for Style 0 (up US$0.39/kg CIF), Style 1S (up US$0.54/kg CIF) and Style 4 (up US$0.33/kg CIF) and Style 4L (up US$0.69/kg CIF). Average kernel prices in observed transactions, aggregated for all styles, are now above the US$8.25/kg reported for 2023.
MSM found that registered contracts from South African suppliers have been concentrated in Styles 1L and 1S as well as Styles 4 and 4L. Together these represented 82.9% of kernel volume committed in observed transactions during April. Average prices for South African suppliers are typically slightly lower than average international prices.
NIS price trends
Trading in NIS during the month has been dampened by bargaining hunting by buyers on the one hand, and suppliers on the other hand who are holding out for the prices they believe the market can achieve this year. Average price increases observed in transaction data derived from Stratamarkets reveals that prices for the favoured NIS 22+ and NIS 25+ sizes have recovered more quickly after the Chinese New Year than smaller sizes.
MSM has found that registered contracts from South African suppliers have been concentrated in NIS 20-22 and NIS 22-25 categories, which together represented 75.1% of NIS volume committed in transactions during April. South African prices are typically lower than Australia which enjoys preferential trade access to China’s markets.
Immediate Outlook
The second quarter will bring firmer news of 2024 supply available from South Africa and Australia, the arrival of which has an impact on the global market each year. Suppliers will be weighing up whether price increases for kernel products relative to NIS are sufficient for them to commit more stock to processing. Prioritising NIS exports over the past few years, which protected returns under the sharp price decreases and rapidly rising production costs, has assisted handlers in a tough market. However, the landscape is changing with expanding domestic production in China along with that country’s increased investment in its own processing capacity. Kenyan and Malawian NIS exports to China, for example, are reportedly processed by Chinese handlers for ingredient markets. This all puts diversification pressure on suppliers dependent on Chinese purchases to retain value in the market. Stratamarkets reports that Australia, which reduced its kernel export volumes in 2023, is already “well sold” on NIS early in 2024. A recovery in European kernel demand will favour Kenyan, Malawian, Guatemalan, and South African suppliers but opportunities hinge on prices that provide adequate returns. Containing production costs while achieving high quality harvests will be key to this.
With 2023 stocks depleted, demand for NIS is expected to rise from May, peaking in September and again in December. Depending on supplier decisions in major grower countries, this could lead to reduced availability of kernel stock on the market and impact kernel prices.
Trade trends
The graphs below superimpose import volume and import value timelines for key macadamia nut markets. The usefulness of this is to compare the up and down trajectories of the line-graphs to get a picture of improving or worsening prices. Where value has a more intensive decline than volume, or where increases in volume are not matched by increases in value, this suggests downward price pressure. The trade trends for major import markets below show that downward price pressure on products supplied to China intensified from the end of 2022 whereas kernel products supplied to Europe experienced downward price pressure later into 2023. Downward price pressure on products supplied to the USA occurred prior to the 20-month period covered in the graphs. The market expects prices to rise in 2024, particularly for Europe, so trade value may rise faster than volume into the year ahead. Publication of trade statistics lag by some months, trends will only become clearer as the year progresses.
