September 2020 market report

Australian industry remains well positioned despite disruption caused by COVID-19

Supply

The 2020 Australian macadamia harvest is nearly complete. Harvesting conditions have been largely favourable and nut quality is good.

All origins are expected to achieve close to forecasted volumes, with the exception of South Africa.

In June, Macadamias South Africa (SAMAC) published an updated crop forecast for 2020 of 49,503 tonnes (in-shell at 3.5% moisture content). This is approximately 16% lower than their 2019 crop of 59,050 tonnes and approximately 20% below their initial forecast. This reduction is attributed to extreme heat during flowering and overall drought conditions.

Overall, global supply is expected be down around 7% on last year.

Demand

In the 12 months to May 2020, we saw a reduction in imports across the majority of markets compared to 2019, primarily off the back of record Q1 shipments in 2019 and the high degree of uncertainty caused by COVID-19 in Q2 of 2020. However overall imports remain strong when compared with 2018, up 16%.

It is evident that the current coronavirus led environment is having an impact. Minor disruptions to international shipping have occurred and a pattern of buying to shorter horizons has emerged.  However sales are improving in Q3 and the Australian industry is well positioned due to the diversity of its customer and market base.

Australian sales

Kernel availability in the period from July 2018 to June 2019 was high due to a large crop in 2018 and this resulted in higher sales than previous years. A reduction in the 2019 crop coupled with a soft 2020 Q2 due to the impact of COVID-19 has seen a return to previous sales levels of around 10,000 tonnes.

Results were mixed with snack styles selling strongly and ingredient styles down. Retail sales over the last six months have increased significantly in part due to pantry filling by consumers. While the travel sector and smaller retailers will remain impacted due to the loss of retail foot traffic, overall sales with large retail chains is expected to continue its solid position.

The food service channel has been significantly impacted by the restrictions forced upon it due to COVID-19 and the manufacturing sector has also been impacted due to disruptions to the supply chain. The strong investment in marketing to these sectors made over the last three years is expected to place the Australian industry in a good position.

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