Disruptions to global trade and supply chain due to Covid-19 continue to cause short-term impact across most geog-raphies. The oil industry saw unprecedented negative prices due to drastic demand reduction. Service industries like HoReCa, tourism, and travel are heavily impacted while grocery and retail have seen spikes in business. The situation seems to be getting under control in China and manufacturing has started again, bringing comfort to the dependent industries. Europe, USA, and Japan are severely impacted while trying to open their economies as well, which might lead to unwarranted situations in due course. Developing countries like India, Brazil and African nations seem to have the situation under control, though the worst might be yet to come in the next few months. The next 2-3 months are going to be the most critical for the global economy and hopefully things will take a turn for the better. Once the situation is normalized, consumption is expected to rise again but it may not be enough to cover lost sales. At the current moment, for most commodities, prices are at their lowest points of the last few years and we believe that they’re close to the bottom and now is a good time for coverage. The trends for individual nuts are given below and might change drastically in the next few weeks basis how the situation unfolds.
The cashew market continued to remain volatile in RCN while the kernel market was stable with rangebound prices. The IVC government estimated their crop to be down 10% from last year while continuing to maintain minimum prices by supporting national exporters. As other major origin crops come into the second half of their season, quality drop cou-pled with rainy weather has been a concern. The RCN market saw some spot demand coming in from Vietnam as local crop comes to an end, providing much awaited liquidity to traders. Exports from Vietnam continue to remain high and most buyers in developed countries are expected to be well covered for the next few months. With an equal or slightly smaller crop coupled with deterioration in demand over the next few months, RCN prices are expected to remain volatile while kernels are expected to remain in the current range.
The 2020 US crop has experienced near-perfect growing conditions and will be harvested beginning in August. While there have been some reports of more drop (trees shedding some almonds) than normal, an excellent crop remains expected. April shipments remained strong at 181 million pounds, representing the fifth month in a row of record ship-ments. The EU came in strong over the last week, lending stability to the Standards grade, for which other varieties are traditionally based off. Pricing is now at the lowest levels we have seen in over a decade. As they say, “the best cure for low prices is low prices.” With a much larger crop expected and market activity around the world at a minimum, the industry will have to determine how to bring demand into alignment with supply. As the market continuously experi-ences further softening, buyer confidence is low, and many are waiting to see some extended stability before booking additional volumes.
The pistachio market strengthened by 10 cents/lb. compared to last month. There have been some reports of adverse weather impacting upcoming bloom which might lead to lower yields or delayed harvest as well. Though it is too early to ascertain this impact, the signs are pointing to a crop slightly shorter than current estimates. Kernel demand remains good across the US and Europe and is providing stability to the market. Inshell shipments and demand have been consis-tent and prices are expected to remain stable to firm.
The 2019-2020 Chilean crop is expected to be between 115K-135K MT despite an increase in planted acreage. The average nutmeat size is expected to be smaller and shipments are running in full swing at the present. With weakened prices, buyers are covering their positions which may lead to a quick sell out of larger sized nuts, leaving smaller sized nuts for later months. The US also continues to ship good volumes leading to consistent supply and keeping the market stable to weak. In the next few months the market is expected to remain weak and may become firm once the demand situation is better.
Turkish hazelnut shipments between September 2019-April 2020 stand at over 270K tons, which is almost +28% from last year’s shipments of 210K tons for the same time range. Poor supply from Georgia and Italy combined with higher demand from China in the last quarter of 2019 resulted in higher shipments. Recent industry reports give emergence of a more optimistic view on the potential of Turkey’s new hazelnut crop with early suggestions that between 600K – 650K tons is possible. As European demand is expected to remain low for next few months, the market is expected to ease out on supply keeping prices stable to slightly weak in the short term.
The outlook on Macadamia supply and demand remains tricky. The Australian crop is expected to be smaller than last year with concerns of extreme drought. The South African crop looks healthy though there are concern on financing as well as the COVID-19 situation. On the demand side, buyers are looking for spot coverage while remaining cautious for forward positions, which is keeping prices firm. Snacking demand is expected to remain normal for the year while ingredient demand may reduce in the short term. Prices are expected to remain stable to firm for the current year unless the situation deteriorates drastically in developed countries.