GREEN & GOLD MACADAMIAS

2018 Interim Market Report

03 ExecutiveSummary

04 GlobalCropSupplyForecast

07 MarketOverview

08 Kernel (Snack And Ingredients)

09 Nut In-Shell

10 IndustryNews

11 Contacts

CONTENTS

Green & Gold Macadamias - 2018 Interim Market Report 2

This report intends to offer an informed opinion on macadamia market trends using statistics from leading industry bodies together with analysis from Green & Gold Macadamias (G&G). It aims to set the context for our end of season report, which once the 2018 season data is available, will include recommendations around how to best manage purchasing requirements for 2019.

G&G is one of the world’s leading macadamia marketing businesses. Their sales team spans each continent of the globe, and extensive processor partner network is representative of each of the key macadamia growing regions. They are robustly leveraged, to offer customers the best quality, style and supply guarantee possible.

Current strong demand momentum in the macadamia industry continues to be driven by sustained increase in supply.

Following the recent International Macadamia Symposium that took place 16 - 19 October in China’s major macadamia producing region, Lin Cang, it is clear that going forward quality will increasingly become a focus for the Chinese market.

Supply is in line with expectation, however the kernel market remains tight on the back of strong demand for snacking grades. Additionally, a general upturn in new R&D projects for ingredient grades is taking place.

EXECUTIVE SUMMARY

Global crop has grown by 40% over the last five years, and with reasonable weather, is projected to increase by 100% in the coming five years.

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Macadamia supply has grown over 47% over the last ten years. Current 2018 global crop estimate is 211,000 mt tonnes in-shell (12% increase on 2017) largely driven by South Africa.

WORLD MACADAMIA PRODUCTION

Kernel Basis - Metric Tonnes

GLOBALCROPSUPPLYFORECAST

2007

2007

2008

2009

2010

2011

2012

2013

2014

2015

2017

26,495

27,951

27,639

28,714

29,484

36,907

37,497

41,687

47,247

49,813

51,854

47%OVER PRIOR 10

YEAR AVG

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South Africa is set to produce 52,400 mt tonnes in-shell this year (significantly up from 44,600 mt tonnes in 2017 due to drought). Australia 47,500 mt tonnes in-shell and Kenya 32,500 mt tonnes in-shell. We wish our friends in Hawaii continued safe passage and minimal disruption during harvest following series of tropical storms and hurricanes.

ESTIMATED WORLD MACADAMIA PRODUCTION

Inshell- Metric Tonnes

GLOBAL CROP SUPPLY FORECAST

2017 2018

Country Beg. Stock Crop Total Supply

Ending Stock Beg.Stock Crop Total

SupplyEnding Stock

Australia 0 43,000 43,000 0 0 47,500 47,500

South Africa 1,880 44,610 46,490 0 0 54,000 54,000

Kenya 0 30,500 30,500 0 0 32,500 32,500

USA 0 17,900 17,900 0 0 15,473 15,473

China 0 10,000 10,000 1,000 1,000 18,000 19,000

Guatemala 0 10,250 10,250 0 0 11,000 11,000

Malawi 0 4,639 4,639 0 0 5,358 5,358

Brazil 0 4,500 4,500 0 0 6,200 6,200

Colombia 0 1,000 1,000 0 0 1,200 1,200

Vietnam 0 840 840 0 0 1,500 1,500

New Zealand 0 229 229 0 0 240 240

Swaziland 0 110 110 0 0 130 130

Others 0 19,046 19,046 0 0 20,000 20,000

World Total 1,880 186,624 188,504 1,000 1,000 213,101 214,101 0

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It is too early to offer predictions for the 2019 Southern Hemisphere supply. Most areas report reasonable winter rains and good flowering - positive indicators for the coming season. Southern Hemisphere harvest takes place between July and December. This represents the majority of supply (70% of global crop). Buying product and planning for the off season from March - June is imperative in ensuring supply security.

ESTIMATED WORLD MACADAMIA PRODUCTION

Kernel equivalent - Metric Tonnes

GLOBAL CROP SUPPLY FORECAST

2017 2018

Country Beg. Stock Crop Total Supply

Ending Stock Beg.Stock Crop Total

SupplyEnding Stock

Australia 0 13,760 13,760 0 0 14,200 14,200

South Africa 526 13,383 13,909 0 0 16,200 16,200

Kenya 0 5,795 5795 0 0 6,000 6,000

USA 0 4,700 4,700 0 0 3,713 3,713

China 0 2,800 2,800 300 300 5,000 5,300

Guatemala 0 2,200 2,200 0 0 2,500 2,500

Malawi 0 1,286 1,286 0 0 1,485 1,485

Brazil 0 1,150 1,150 0 0 1,550 1,550

Colombia 0 250 250 0 0 300 300

Vietnam 0 210 210 0 0 374 374

New Zealand 0 57 57 0 0 60 60

Swaziland 0 26 26 0 0 30 30

Others 0 4,717 4,717 0 0 5,000 5,000

World Total 526 50,334 50,860 300 300 56,412 56,712 0

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Macadamia exports around the globe have increased by 112% over the last ten years. This growth in demand is set to be supported by a more than doubling of crop forecast by 2022.

The 2018 season started with low kernel carry over from 2017 and minimal unsold nut in-shell in China. The early 2018 kernel market was driven by a mini pipeline fill as the market scrambled to fill their short positions. The nut in-shell market turned into a “wait and see” approach from the Hong Kong traders and China importers.

MARKET OVERVIEW

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At halfway through the season the kernel market remains in largely tight supply driven by demand for styles 0, 1, 2 and 4L snack grades. Universal nature of growth for both emerging and mature markets was not anticipated. Ingredient grades (styles 4 through 8) are back on R&D schedules in an increasing variety of categories.

WORLD MACADAMIA EXPORTS

Shelled (Metric Tonnes)

MARKET OVERVIEW - KERNEL MARKET112%

OVER 2016

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

14,684

25,993

27,113

31,260

32,659

34,320

34,451

22,685

33,947

30,614

31,187

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Demand for nut in-shell imports from Chinese companies is well below previous years. The reasons for this are complex and have varying degrees of importance, including rumours of defaulting on contracts. That said, consumption of nut in-shell is not in decline. Nut in-shell demand is increasingly being supported by China’s domestic product.

This poses a challenge for the industry, and particularly the South African industry. Demand from China is likely to change in that the specification will be for larger nuts, higher sound kernel recovery (nut to shell ratio) with higher quality requirements. This is not a surprise to the industry, but does leave it with the need to add processing capacity and value add investment in being able to crack smaller nuts.

WORLD TREE NUT ESTIMATED CONSUMPTION BY REGION (2016)

27%

23%22%

14%

10%2%

2%ASIA

NORTH AMERICAEUROPE

MIDDLE EAST

AFRICA

LATIN AMERICA

OCEANIA

MARKET OVERVIEW - NUT IN SHELL

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The International Macadamia Symposium (IMS) took place 16 - 19 October and offered invaluable learning and insights into the global market. The Australian Macadamia Society (AMS) holds its annual conference 13 - 15 November..

Through collective focus and significant investment from key industry players, in 5 macadamia growing countries, September marked the commencement of a world-first scientific health research project for the global macadamia industry.

The Australian Macadamia Society has for the second year running kicked off it’s “Innovation Challenge” which invites entries from food professionals and food technology students to submit truly original and innovative product ideas. Last year’s winning ideas are in progress to market!

INDUSTRY NEWS

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CONTACTS

White River, South Africa

T +44 208 133 0484

M +27 720 311 838

AlexWhyte

Sales & Marketing Manager

EUROPE, AFRICA & THE MIDDLE EAST

Shanghai, China

T +86 21 5150 1897

M +86 139 1628 5563

Sabrina Li

Key Account Manager

CHINA

Tanglin, Singapore

T +65 6801 0668

M +65 9735 0500

BobbyTan

Market Manager

ASIA

São Paulo, Brazil

T +55 14 3652 6299

M +55 11 99727 4307

Source for graph data - The International Nut Council

Beatriz Egreja Camargo

Sales & Marketing Manager

LATIN AMERICA

Gold Coast, Australia

T +61 7 5575 2497

M +61 433 153 133

Brian Loader

CEO

AMERICA, AUSTRALASIA & CHINA

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