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South African NIS 20-22 prices gain amid talk of smaller crop

June 7, 2024

A tightening supply of smaller-sized nut inshell (NIS) from South Africa bolstered prices for the item in the global macadamia market during the week ending on Friday. 

Driving the move: With kernel prices strengthening recently, processors have been incentivized to crack out their remaining NIS 20-22 inventory to fulfill kernel orders made earlier in the season.  

Returns on South African NIS 20-22 have been constrained. The item has traded at an average 72 cents/kg discount to NIS 22+ since Stratamarkets began assessing both items in February. 

What they’re saying: “People have possibly held back on offering 20-22 as they will get more money for their facility if they crack and sell that way,” said a South African processor on Friday. 

Tell me more: NIS 20-22 traded twice during the May 31-June 7 assessment period at $2.50/kg CIF China and $2.60/kg CIF Eastern Europe. The item was assessed at $2.55/kg CIF China, up by 21 cents and its most significant on-week gain since assessments began.  

South Africa-origin NIS 22+ traded at $3.10/kg CIF China and $3.25/kg CIF Eastern Europe. The item was assessed 8 cents higher at $3.18/kg CIF China, a nine-week high. 

Large Chinese NIS buyers are still refraining from purchasing as they wait for their inventories of value-added products to deplete, sources said. 

“We’re seeing a lot of Chinese interest, but the market is price-sensitive,” said a South African trader on Monday. “They’re happy at these current levels, but if you try and push it up too quickly, they’ll just back away.” 

Kernel market 

Prices for premium kernels with high whole nut percentages reached new crop year highs. South African Style 0 and Style 1 traded at $14/kg CIF Europe and $13.50/kg CIF Europe, respectively.

The most competitive offer for Style 4L – a medium grade popular in Europe, the U.S., and China – was $8.80/kg CIF U.S. It was assessed at $8.79/kg CIF U.S., down 10 cents. 

South African processors said they continued to exercise caution in offering more kernels because they are already heavily committed. Moreover, there is a lack of available nut inshell stock to crack because more growers are selling NIS directly to China this year, sources said. 

“I am oversold and concerned I may not get sufficient intake as many [growers] are selling NIS directly,” said a second South African processor on Thursday. 

A third South African processor said he was limiting his offers to Style 0 and Style 1.

“We cannot offer any other grades as we are well sold, and it looks like the South African crop might be coming in below  forecast,” he said on Friday. 

South Africa’s 2024 crop is estimated to increase by 14% year-on-year to 90,135 inshell equivalent metric tons (ISEmt), according to Macadamias South Africa (SAMAC), an industry association.  

However, volatile weather patterns in South Africa’s growing regions during the harvest could negatively impact the final crop size. The first South African processor said some small farmers have seen reductions in their crop volumes due to damage caused by strong winds and hailstorms.

South Africa’s harvest began in March and will be finished by August.   

Look ahead 

Reports from China indicate that the country is on course for a 68,000 ISEmt crop this year, a 21% year-on-year increase in production, sources said. Harvesting of the crop is likely to start in the second half of August.