Macadamia Situation and Outlook
|Following a decade of rising macadamia nut prices, prices have fallen sharply in response to world supply far exceeding demand. Factors accelerating this decline include increasing macadamia acreage and production, primarily in Australia and South Africa; record U.S. and Australian macadamia crops in 1997; a downturn in demand in Asia, the largest regional market, due to the continuing economic and financial malaise affecting that region; and slackening European demand in response to higher nut prices. As a result, U.S. macadamia export prices fell an average of 14 percent from 1997 to 1998. Increased production from Australia, now the worlds largest macadamia producer, is likely to continue in the near future. While the United States is currently the worlds second largest producer, it remains a significant importer of macadamias. The United States is the largest single export market for Australia, South Africa, Costa Rica, Guatemala, and Brazil.|
In 1997, the United States dropped to second place in world macadamia production. U.S. macadamia nut production in 1998/99 is forecast at 24,040 tons, 7 percent below last years crop. Drought-like conditions throughout most of 1998 are mainly responsible for the expected lower output.
Exports in 1998/99 are forecast to decrease 7 percent from last year to 3,000 tons, due to decreased demand from Asia, the U.S. largest regional market. The United States exports mostly prepared or preserved macadamia. Japan comprises the U.S. largest single market and purchases about 62 percent of total U.S. shipments.
While sales to Japan are up 33 percent compared to this same time period last year, sales to the other three big Asian markets (Hong Kong, Taiwan and South Korea) are down 76 percent.
U.S. imports in 1998/99 are forecast to increase to 16,000 tons, up 18 percent, due to the expected smaller harvest. Shelled macadamias account for most U.S. imports. Guatemala, Kenya, South Africa, and Costa Rica remain the principal suppliers of shelled macadamia nuts to the United States.
Lower worldwide demand has adversely affected U.S. macadamia nut prices. According to the Hawaiian Agricultural Statistics Service, farm prices fell by 5 percent from $1.72/kg in 1996 to $1.65/kg in 1997.
Contrary to earlier forecasts of a larger crop, Australia produced less -- 24,500 tons -- of macadamias in 1997/98, but nevertheless passed the United States to become the worlds largest macadamia producer. The 1998/99 crop is set to rebound from last years smaller crop with the Australia Macadamia Society (AMS) projecting output at 30,000 tons. Australia will continue to realize greater production increases in the near future as more orchards come into commercial production.
Australia remains the worlds largest macadamia exporter, shipping about 60 percent of output. Exports in 1998/99 are forecast at a record 19,000 tons, 12 percent above the previous years shipments. The U.S. is Australias single largest export market accounting for 30 percent of total 1997/98 exports. Australia exports mostly bulk products to Asia and Europe.
Asian countries form the largest regional market, accounting for 46 percent of total 1997/98 Australian exports. Japan and Hong Kong are the largest Asian customers, accounting for 17 and 15 percent respectively of last years exports.
AMS estimates that the average farmgate price per kilogram fell over 20 percent during 1997, reaching USD$1.50 for the 1998 crop.
The 1998/99 harvest is expected to increase 15 percent from last year to 7,350 tons. This increase is due primarily to continued favorable weather conditions and trees coming into full production. The crop could increase to approximately 9,500 tons by the year 2001 based on the number of young trees coming into full production.
Exports in 1998/99 are also projected to rise, up 20 percent from 1997/98 to 6,500 tons. The U.S. and Asia were the biggest importers of South African macadamia nuts in 1997, accounting for 25 and 24 percent of total exports, respectively.
With relatively high world stock levels and declining worldwide demand, South African producer prices have fallen 20 percent from 1997 to 1998.
Macadamia nut production for 1997/98 was much lower than previously forecast because of adverse weather conditions caused by El Niņo. In 1998/99, production of macadamia nuts in Costa Rica is forecast to increase about 15 percent to 2,300 tons.
Exports are also projected to rise because of the higher expected production, which is now being processed because of the harvesting delay caused last year by El Niņo. The United States is Costa Ricas major export market, accounting for 72 percent of total exports in 1998. The European Union is the second biggest importer of Costa Rican macadamias, purchasing about 25 percent of exports.
Depressed worldwide prices also affected Costa Rica, with the 1997 average producer price of USD$5.50/kg for shelled macadamias falling to USD$3.60/kg in 1998.
In 1998/99, macadamia nut production is forecast at 3,500 tons, up 25 percent from last year. This trend is expected to continue for approximately the next five years as the number of trees of bearing age come into full maturity.
Guatemala exports nearly all of its macadamia nut production, with the United States and the European Union accounting for 80 and 10 percent respectively of Guatemalas exports.
Reflecting the worldwide decrease in macadamia nut prices, the average kernel export FOB price dropped from USD$4.50/lb to USD$3.50/lb between 1997 and 1998.
In 1998/99, Brazils output of macadamias is expected to rise 10 percent to 1,760 tons, reflecting favorable weather conditions and more trees entering production.
Exports are forecast to increase 8 percent to 270 tons. In 1997/98, the United States purchased about 56 percent of Brazils macadamias, with the European Union accounting for approximately 37 percent of exports.
The recent January 1999 devaluation of the Brazilian currency will increase the competitiveness of Brazils products and producers hope to increase macadamia exports. However, high interest rates and lack of government support in the macadamia industry may negatively impact productivity and exports and offset the competitiveness gained by the recent currency devaluation.
Note: Information on the 1998/99 Kenya macadamia crop was not available prior to publication due to a reporting delay caused by the bombing of the U.S. Embassy in Nairobi in August 1998.
(For further information on supply, distribution, and trade, contact Lisa Anderson at 202-720-5028. For further information on U.S. marketing opportunities, contact Ingrid Mohn at 202-720-5330.)