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Record prices and expected increased volumes bring with it fear of a macadamia bubble

Macadamias in 2018: Bonanza or bubble?

Despite lower volumes due to the lingering effects of drought, the opening prices of the season for nuts-in-shell were the highest yet and continued to rise 10 to 15% throughout the season. Kernel prices have ended at high levels not seen before.

Alex Whyte, marketing manager of Green Nut Farms, says: “The season was quite amazing with astronomical demand for both kernel and nuts-in-shell. The only negative was the drop in volumes, which was a bit disappointing. The trees were still much affected by the drought. By now we should’ve been at 50,000t.” The final estimate for the past season is 42,000t nuts-in-shell, still not up to the level of 2015 and far below the longterm forecast for 2017 of 50,000 to 55,000t. The decrease was mostly seen in Limpopo macadamia orchards.

“The summer temperatures in the Lowveld were actually very good for macadamias, better than the excessively hot temperatures of the 2015/2016 summer, and we saw that farmers who could irrigate, had very good harvests,” says Nico van Schalkwyk, marketing manager of Golden Macadamias in Mpumalanga. “In fact, our volumes were slightly higher than initially expected, even factoring in new plantings.”

Macadamia expansion is continuing apace, only constrained by the availability of trees. Sugar cane, banana, even maize (corn) farmers are investing in macadamia plantings from Kenya southwards. Macadamia tree nurseries have waiting lists for young trees ranging from, depending on the cultivar, four months to eighteen months.

Nervousness around record prices and lack of new demand
The expected volume increase, both locally and worldwide, as well as the record price levels of this season bring with it a degree of uncertainty. There is the fear of a looming bubble in the global macadamia sector because at current levels, additional demand for a nut that still makes up just about 1% of the global nut industry, isn’t easily stimulated. “There won’t be shelf space for all of the new volumes and it’s the time it might take for the markets to stabilise, that makes us nervous,” explains one exporter.

Some exporters report that buyers are already taking 2018’s kernels at the current record levels, but if all extra expected volumes can’t go to China, the levels probably won’t hold. 

Fewer nuts were processed to kernel this year (the South African Macadamia Growers’ Association puts the figure at 49%, compared to 64% last year), as exporters made hay while the sun shone, given the excellent NIS prices. Some companies, like Royal Macadamia in Levubu focus on the kernel market, with longstanding clients (primarily in the USA and the UK) as the safer option.

For more information:
Alex Whyte
Green Nut Farms
Tel: +27 72 031 1838

Nico van Schalkwyk
Golden Macadamias
Tel: +27 13 733 5034

Cobus Janse van Rensburg
Royal Macadamia
Tel: +27 15 151 0077

Publication date: 9/22/2017
Author: Carolize Jansen
Copyright: www.freshplaza.com


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