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Australian inshell prices soften on restrained Chinese demand

May 17, 2024

Australia-origin nut inshell (NIS) prices declined in the global macadamia market during the week ending on Friday as sellers accepted lower bids from China and trade activity perked.

Driving the move: Several Australian processors are generally well-sold on NIS and have sufficient cracking capacity to produce kernels that are not dependent on sales into the Chinese market.

Nevertheless, NIS demand has been restrained because large Chinese buyers bought substantial volumes of Kenya-origin inshell at discounted prices earlier in the crop year and are taking delivery of that product.

With Australian farmgate prices set between US$2-2.20/kg (AUS$3-3.30/kg) for inshell with 33% Sound Kernel Recovery (SKR) and 10% moisture, several processors are competing for Chinese business and basing their offers on farmgate prices and added processing and shipping costs.

What they’re saying: “China took that position on Kenyan products, so they didn’t have to be desperate for South African or Australian, and that has definitely pushed the inshell price down,” said an Australian processor on Thursday.

Tell me more: Australia-origin NIS 22+ with minimum 33% SKR and less than 2% Unsound Kernel Recovery (USKR) traded between $3.50-$3.65/kg CIF China during the May 10-17 assessment period. Stratamarkets assessed the item at $3.57/kg CIF China, down 11 cents on the week.

In the South Africa-origin NIS market, NIS 22-25 traded at $3.10/kg CIF China. A bid was heard at $3/kg CIF China against offers posted between $3.05-$3.10/kg CIF China. Stratamarkets assessed South African NIS 22+ at $3.10/kg CIF China, up 5 cents.

South African NIS 20-22 traded between $2.30-2.50/kg CIF China and was assessed at $2.40/kg CIF China, up 5 cents.

Kernel market

South Africa-origin kernel prices made marginal gains and losses during the assessment period. While larger high whole percentage grade prices slipped, assessments for Style 1S and smaller kernels firmed. The only reported trade was for a container of Style 2 at $11/kg CIF Europe on Friday. The item was assessed at $11/kg CIF Europe, up 5 cents on the week.

The availability of Style 1S and Style 4L is tightening, which is unsurprising given that both grades are used to make Style 2, which has seen solid demand, sources said.

There is a lull in the kernel market as processors assess available volumes, crack-out rates, and quality, sources said. In the meantime, offers to Europe for most kernel products have been inching higher as inventories in the region fall.

“A lot of grades have been sold, the crop from South Africa is late, and that will put buyers under pressure because I don’t think there’s much available at all in Europe,” said a U.K.-based trader on Friday.

With South Africa’s 2024 crop running around two to three weeks late, and farmers in South Africa, Kenya, and Australia having contracted large volumes of NIS directly to China, sources said they were concerned about intake volumes for kernel production.

“Intake is way below forecast, and that will mean a lot less kernel produced this year,” said a South African processor on Friday.