Nut inshell prices fall as South African and Kenyan kernel spreads tighten

July 5, 2024

South Africa-origin nut inshell (NIS) prices fell toward the lower end of their recent range in the global macadamia market during the week ending on Friday due to limited demand from China.

Driving the moves: Price-sensitive buyers were limiting their bids to $3/kg CIF China for South African NIS 22+. Lower offers to China from South African grower cooperatives added pressure to prices. A few grower cooperatives in South Africa have invested in X-ray machines and drying silos, enabling them to bypass local processors.

The recent tepid demand from China follows heavier purchasing at the start of the season, when Chinese end-users stocked up on lower-quality and less expensive NIS from Kenya. Last year, Kenya lifted a temporary ban on NIS exports.

More recently, buyers in China purchased large volumes of higher-quality NIS from Australian and South African processors, which drove prices higher.

What they’re saying: “Chinese interest hasn’t been good this week,” a South African processor said on Thursday. “They will only buy more at lower prices.”

“China wouldn’t take [South African NIS 22+) from me for anything but $3.10 or below,” said an Asia-Pacific-based trader on Thursday.

Tell me more: South African NIS 22+ traded twice at $3.10/kg CIF China during the June 28-July 5 assessment period, and Stratamarkets assessed the item at the same level, down 5 cents on the week. NIS 22+ prices had been broadly up since hitting a crop year-to-date low of $3.02/kg CIF China on May 3. There were no reported trades for South African NIS 20-22, with the item bid at $2.40/kg CIF China. Stratamarkets assessed it 5-cents lower at $2.55/kg CIF China.

Kernel market

South African origin prices for premium-grade kernel with high whole nut percentages fell on the week. Participants noted that price premiums for these items over equivalent Kenyan kernel items were eroding.

South African Style 1 traded at $12.50/kg CIF China, down 69 cents and at parity with a reported trade for Kenya-origin Style 1. South African Style 0 also softened, losing 5 cents to $14.25/kg CIF Europe.

The narrowing South African origin kernel premiums to Kenyan origin are due partly to lower kernel availability from Kenya this year amid low stocks of higher quality NIS required for kernel processing, sources said.

Moreover, with several South African processors not offering kernels, some buyers have been turning to other origins, including Kenya, to cover their prompt needs.

“South Africans at the moment just don’t have the supply,” a Germany- based trader said on Tuesday. “They can’t offer, no matter the price. Kenya makes the market price for Style 1, especially if you talk to buyers.”

Several South African processors said they could not offer until they have a firm handle on the remaining inshell inventory to crack out. Harvest gathering is likely to continue until the end of August.

Processors have continued to focus their sales efforts on the NIS market in China this year due to low margins in kernel markets, sources said.

“We have a situation where retailers have tried to force a low price on the market, so many growers have rather supplied the China inshell market for better returns,” said a second South African processor on Thursday. “Now, the retailers have been caught short of stock, and the market is still trying to find balance.” Australia-origin prices diverged from South African, with Style 1 trading higher at $15.20/kg CIF Asia and $15.50/kg CIF Europe. The item was assessed 20 cents higher at $15.20/kg CIF Asia.