Disruption and uncertainty due to COVID-19 continues to impact markets at a global level. A few countries like Australia, Vietnam, and Japan have been able to manage the situation well so far but as of late are facing increases in cases as well as community spread. India, Brazil, and the USA continue to be the worst affected but have no option except to slowly reopen their economies. Q2 2020 saw the worst negative growth in the US economy, causing a ripple effect across other major markets. There have been breakthroughs in vaccination development, but commercial production may be few months to a year away. Commodity prices continue to run at record lows, providing good coverage opportunities, and there seems to be fewer chances of any further downside. There is increasing hope that situation would improve soon, and the overall global economy can recover by the last quarter of 2020. There has been a proportionately higher focus on healthy food items and the Edible Nuts space has large offerings to fulfill such demand. Detailed information on various nuts and superfoods is as below:
The cashew market has been reasonably silent in the last few weeks. There has been interest from buyers to cover their needs for 2021 as the current levels appear attractive. As it is difficult to hedge far forward sales, the volume of trades for the forward position is suspected to be low. Inshells were more active and prices continue to remain firm. Mismatch in parities has put a lot of shellers on the defensive and many shellers are closing due to lack of viability. Also, a very large transaction took place on inshells towards the end of July whereby one company had purchased all the good quality unsold inshells from the government of IVC. With the large position in inshells changing hands, most of the surplus inshells in the market is in very few hands. This will lend stability to inshell and kernel markets if these players do not panic. On the consumption side, the worst seems to be over. China continues to be guarded in their cashew purchases while in India, there is some stability in domestic demand. All signs indicate that we have come close to market bottom unless economic activity suffers again due to the pandemic.
The final 2019 July shipment report was released, reflecting a nearly 5% increase over last year with 2,372 billion pounds shipped. This immediately gave growers the confidence well desired. New crop commitments are now at 696 million pounds, which represents 24% of the crop (if in fact we harvest 3.0 billion pounds). This is ahead of the same time last year when we had 14% of the crop sold. With sales having been steady, shipments should continue to be strong in August carrying through the transition between current crop and new crop. Current market levels represent a great value and buyers recognize that fact. Regardless of a clear picture of demand, buyers are willing to layer on business accordingly. With increased resistance from growers, prices continued to firm over the last two weeks, still representing a great value and working to find a balance that buyer and seller are willing to accept. With harvest under way now the true selling season has arrived. India, the Middle East, and Turkey have been active in the last week. There is great excitement in the air and we all look forward to an exciting season.
The pistachio market continues to remain weak with the Iranian origin seeing the lowest prices in last decade, which has impacted USA pricing too. There have been some good export shipments as logistics largely remain unhindered due to COVID-19. The drop in China’s demand during Q2 - Q3 of 2020 has affected prices adversely. There is hope of good demand in Q4 as the situation improves and Chinese New Year demand kicks in. Being largely a snack item with limited usage in the HoReCa industry, the demand has seen less impact in the EU and the USA as people continue to shop. Balance inventory in the US is very limited and all eyes are on upcoming harvest and price establishment with the hope that crop yields are as per expectations without any major surprises.
The 2019 USA crop was 6.8% smaller compared to 2018’s crop. Higher prices in the beginning of the California season, cheaper offers from China, and COVID-19’s impact on the HoReCa segment resulted in 9% reduction in shipments year-over-year. The USA is estimating 725k tons in 2020, about 75k tons higher than last year. In anticipation, prices have softened by 20-25% from the beginning of the season. Current prices are very attractive, and these lower prices are expected to boost consumption and demand. Spot demand has already started picking up in most markets.
The hazelnut market remained stable for the last few weeks as overall demand seems to be similar to 2019. Turkey has exported 307,000 MT of the 2019/20 crop so far, which is almost 30% higher than last year for the same period. Most of the buyers seem to be well covered, leading to slowed demand while the stocks at origin also are low. The main interest now is for the new crop, which is currently at a premium compared to spot prices. The Exporter Union survey report as well as TMO estimate on crops are expected by mid-July, which will give more accurate information for the upcoming season. The market seems to be in balance with both buyers and sellers reaching an equilibrium and TMO participation may push the prices up if they start falling beyond a certain point.
The macadamia market saw some weakening in prices in last few weeks. The demand for higher sized NIS (nut-in-shells) also reduced as China’s overall demand continues to be low. Ingredient demand continues to be reduced across the EU and the USA due to various lockdowns and the HoReCa sector being largely shut down. The harvest from South Africa crop seems good overall with slightly higher amount of smaller sized nuts. The Australia crop has also been good overall yet slightly short compared to last year. Most of the buyers have covered their demand for the current year, though there has been some new demand coming in especially from China. Prices are expected to remain weak to stable for the next few weeks.
Shipments from both Peru and Bolivia continued with a slight increase in organic quinoa but with a drop on the conventional side. COVID-19 continues to impact and slow down the markets but bids from retailers and some demand from brand owners and few industrial users in various segments continue to keep it running. With an unclear picture on the demand side, spot and one-to-two-month forward deals continue to provide stability to the market. On pricing, even with the crisis, organic quinoa sales prices should be the least impacted because of limited supply at origins and moderately steady demand whereas conventional quinoa prices may remain weak to stable. Chia harvest started last month in Paraguay, Bolivia, and Argentina. More clarity on actual crop size is expected this month as both Paraguay and Bolivia were partly hit by drought and frost.