W34: Macadamia Update

In W34 in the macadamia landscape, the global macadamia nut market is growing and is predicted to reach USD 2.43 billion by 2028 from USD 1.45 billion in 2023. The versatility of macadamias contributes to their appeal. Despite farmers facing production challenges, including supply and cost issues, macadamia farms are expanding, with farmers replacing other crops due to higher demand. Climate-related risks and wildfires affect production, and the long growth timeline adds to pricing. Despite competition from more affordable nuts, the macadamia industry is set to expand due to increasing consumer interest.

Macadamia prices in Australia have experienced a 5% month-on-month (MoM) decline to USD 29.31/kg for macadamia kernels during the second week of August. This drop is attributed to the ongoing harvest season in the Southern Hemisphere and intensified competition from South Africa, resulting in downward price pressures. The Southern Hemisphere's harvest, dominated by Australia and South Africa, yields bumper crops. Australia's production is projected to reach 53.16 thousand metric tons (mt), a minor increase of 0.4% compared to 2022. Despite being lower than initial expectations, it marks a record harvest. As Australia's harvest concludes and supply surges, prices have naturally decreased.

Furthermore, South Africa's harvest is nearing completion, with an anticipated record crop of 77.65 thousand mt, a 13% year-on-year (YoY) increase. Intense competition between South African and Australian suppliers to capture China's macadamia market share, the world's largest importer, contributes to price pressure. In the first seven months of 2023, China's macadamia imports totaled USD 87 million, with South Africa holding a 41% market share and Australia at 36%. This contrasts with the same period in 2022, when South Africa's market share was 28%, and Australia's was 43%, amid USD 65 million in imports. Short-term projections suggest macadamia prices will continue to face downward pressure due to ample supply. However, the medium-term outlook is positive, with an expected demand recovery from China likely to boost prices.