It is not always easy to gain clarity on supply availability from key origins in the macadamia market. In less than a year, the global industry has gone from excess supply to shortages, which has supported price recoveries for both shelled and unshelled macadamias. As year-end holidays approach, origin countries are keenly aware that China’s own harvest likely won’t satisfy that country’s demand to the extent that was expected earlier this year. Similarly, retailers in the US, China, and Europe—key kernel markets—are said to be low on inventories. This will be to the advantage of Southern Hemisphere suppliers who still have stock into the second half of the year and Northern Hemisphere suppliers who harvest towards the end of the year.

The extent to which the Kenyan industry participates in kernel supply in the period ahead may have a significant impact on stock availability. However, while farmers have increased their sales this year at improved prices, the processing industry has been seriously disrupted. Chinese 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. The nature of broker purchasing has been that farmers have experienced high post-harvest losses while handler associations report that 5,000 processing jobs in the industry have been lost.

With Kenya unable to fulfil kernel orders in the US and Europe, the associations lament that buyers have turned to other origin countries. Meanwhile, macadamia byproduct associations have complained that a drop in the availability of waste shells has harmed their business. Amidst this fierce debate, the government is presently deliberating whether to reinstate the prohibition or to do away with it permanently. Farmers fear a return to low prices under the prohibition while processors fear an industry collapse without it. The government appears to be seeking a way to avoid both outcomes by considering a minimum price for farmers.

US import of shelled macadamias spiked in July, showing a strong increase for the first time this year. Historically the biggest market for macadamias, US demand has been in decline since 2019. It didn’t recover in 2023 despite the drop in prices. Imports for the January-to-July period in 2021, 2022, and 2023 all posted values in excess of US$60m. This year, the same seven-month period has only seen kernel imported to the value of US$32m. Macadamia shipping to the US typically climbs in the second half of the year, and market analysts will be hoping the July figures signal demand recovery and a good H2 2024 period ahead.

Source：Internet