Almond Review - Feb 2016

Today the Almond Board of California released the January 2016 position report.

Jan shipments were 129 million lbs. vs. 115 million lbs. last season - up 12%

DEMAND 

We experienced the fourth month in a row where the market seemed to hit bottom and start firming with a period of good activity, only to quiet and see prices fall again.   Sales were very strong the week of Jan 18.   

Shipment re-cap for major markets:

                                  Month          Crop year

U.S.A.                          -15%               -8%

W. Europe                   +100%              +3%

Middle East                  +3%                 -31%

India                            -43%                 -5%

China/HK                   +35%                -9%

Japan                            +51%               +10%

 

THE 2015 CROP

Crop receipts as of Jan 31 were 1.872 billion lbs., up from 1.85 billion lbs. last month.  It appears receiving is about over with.  The NP crop so far is off 24 million lbs. (-3.3%) vs. the '14 crop.  Monterey, which is one of the last varieties to come in, was up 25 million lbs. (+9%).  An overview of receipts shows many regions of the state were off despite new acreage, and reflect why this was such a difficult crop to access:

North Valley 297 vs. 250 million lbs. (+19%)    San Joaquin  94 vs. 94 (flat)

Stanislaus  255 vs. 274 (-7%)                             Merced 185 vs. 198 (-7%)

Madera 207 vs. 203 (+2%)                                 Fresno 370 vs. 370 (Flat)

Kings 31.3 vs. 31.9                                            Tulare 53 vs. 57 (-8%)

Kern 359 vs. 390 (-8%)

The 2016 CROP

The bud set looks very good in much of the state.  With the chilling hours received, it still points toward good variety overlap for pollination.  The unknown is the temperatures during pollination which will determine the length of bloom.  Some growers have sufficient bees secured for pollination and some have been scrambling to find sufficient hives.  There are concerns about the quantity and quality of hives.  Bloom is just getting started in most areas and next week should be well underway for Nonpareil and its pollinizers.  Butte/Padre and other late varieties should follow a week behind.

 

OUTLOOK:

Committed unshipped was 446 million lbs., down 14% vs. a year ago.  

Some have projected a carry-out of 600+ million lbs., assuming shipments are off like they had been for the first five months of the crop year (down 11%, or worse). History shows that in seasons with big price declines early, shipments usually recover in the back half.

2008 Crop Year, Aug-Jan off slightly, Feb-July up 23%

2005 Crop Year, Aug-Jan off 19%, Feb-July up 11%

We also see a repeating pattern in Europe of heavy reliance on local almonds early in the season followed by strong shipments from California later, as seen with today's report:  42.5 million lbs. vs. 21.3 in Jan '15.

If shipments remained off 8.9% for Feb-July, the industry would ship 1.65 billion lbs., with a projected carry-out of about 575 million lbs. vs. 376 million this season.

If flat, shipments would reach 1.73 billion lbs., estimated carry-out 495

If up 10%, shipments would reach 1.82 billion lbs., estimated carry-out 405

Current Bearish Factors:

Early sales at high prices hampering demand in some sectors of the market.

Buying activity has been slow lately.

Good bloom weather outlook for at least the start of bloom season.  Optimistic outlook for the crop is present.  

Weak market sentiment, which is beat down after 5 months of price declines.

Bullish Factors:

Competing Nut pricing:  Cashews and Hazelnuts are in the 3.50/lb. range.  Pistachios, albeit soft, are in the $5 range and pecans have shot up above $6/lb.  Among the major tree nuts, only walnuts are comparably priced.  

Spanish almonds are priced 25 to 50% above U.S. almonds and offers are limited.  

Pipelines appear low in many regions.  In the case of India, there are loads at the port but not much afloat so Indians should be back to buy soon.  The Middle East needs to cover any remaining needs to receive their almonds ahead of Ramadan. 

The Water situation is not factored into current pricing.  Most forgot about the drought after improved weather and the price decline.  Many growers in the federal district are anticipating zero allocation.  Most of these growers will either spend the equivalent of $1.25 to $2.00 per lb. (over $1000 per acre foot) for water for the coming crop, and/or apply groundwater which continues to hurt the long-term health of the orchards. 

Pricing is the lowest since 2012. Current prices may take time to help stimulate demand in some markets that covered more of their needs early, but in others we expect a quicker impact.

Posted here:

Senator McCarthy's letter "Too Much Rain is Going to Waste"

Water Supply Update 

January 2016 Position Report

The February Position Report is due for release Friday March 11

Best regards,

Paul Ewing      Dennis Soares