Almond Review - June 2016

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

May shipments were 178 million lbs. vs. 139.6 million lbs. last season - up 27.6%

DEMAND

A strong shipment figure was expected though most didn't expect this strong, with May being the largest month of the crop year (normally October is).  Shipments for the season are down 2.6%.  Jan-May up 7.7%.    

Moderate buying activity took place in May, with sales of 107 million lbs.  Commitments are up 9% vs. a year ago.

Shipment re-cap for major markets:

                                   Month          Crop year

U.S.A.                           +2%               -8%

W. Europe                    +14%              +7%

Middle East                  +58%              -8%

India/Pakistan              +96%              -3%

China/HK                   +365%            +8%

Japan                             +2%               -4%

THE 2016 CROP

The crop continues to develop well with very low insect pressure.  Growers are preparing orchards for another early harvest.  

OUTLOOK:

Most in the industry are expecting a crop of 2.1 plus, despite the subjective of 2.0 billion lbs., though a handful can also make a good argument for a crop (or an estimate) under 2.1.  Our understanding is that NASS uses "fudge factors" and the estimates can surprise us.   

U.S. demand recovery seems underway, despite some recent forecasts that it would not recover for a "long time" because retail prices would remain high well into the fall or next year.   At the local Costco, the almond price already declined from $17.99 to $14.69 per 3 lb. bag.  At several other stores there are promotions or lower pricing for various brands of almonds & almond butter.  This is a gradual process though, and things should improve further in the coming months.

Emerging market shipments once again showed incredible growth.  The high prices of some competing nuts like cashews (which jumped up around $4/lb.) and low availability of light walnuts, helps fuel growth in these regions that can react quicker.    

Continued focus on the carry-out...  When we reach July 31, the day of the "carry-out", there is no new crop available to ship and pollinators are typically 4 to 10 weeks away depending on variety, size, etc.  Also, much of the carry-out is already sold but not yet shipped.  The likely increase of 20 to 50 million lbs. of "carry out" is equivalent of about 4 to 10 days of shipments. 

When approved by the USDA, the Almond Board of California's assessment should increase by 33% from .03 to .04/lb.  Most of this increase will be used to continue to grow demand for the larger crops on the way.  

While we are optimistic about demand growth, we are are neutral on the market long-term, as too little is known about the 2016 crop volume.  Prices have returned to levels that seem favorable to both growers and buyers, and most are hoping for more stability. 

California Water Paradox:  In July 2015, state park officials ordered the outdoor showers at 38 state beaches shut off to conserve an estimated 55 (Fifty Five) acre feet per year, meanwhile the state water control board have let 18 million acre feet of water flow into the ocean over the past 28 months.  Some water must flow out the delta but much of that could have been captured and sent to municipalities and farms.  Just now some groups are trying to further curtail water supplies by another 400,000 acre feet that farmers were counting on.  Congress members are urging the Bureau of Reclamation to not further hinder water supply.  For more on the California water battles and it's impacts, you can watch this video:  Dead Harvest

Water Supply Update & Congress Water Letter

May 2016 Position Report

Upcoming reports...

NASS' Objective Crop Estimate - Wednesday July 6

June Position Report - Tuesday July 12

Best regards,

Paul Ewing      Dennis Soares