Almond Review - September 2014

Today the Almond Board of California released the August 2014 position report.  

August shipments were 141.7 million lbs. vs. 147.9 million lbs. last season.

Down 4.2% Overall.  

Domestic shipments up 1% 

Exports off 7%

DEMAND:  

August shipments were in-line with industry expectations.  With the early crop and strong Diwali demand, shipments to India were up from 8 to 22.6 million lbs.

Commitments were 441 million lbs., off 11%, as growers and handlers have been very hesitant to sell large volumes over the past month. 

THE 2014 CROP:

For most growers, the crop continues to come in below expectations.  As many orchards with major declines in production had sufficient water, it is surprising the crop is coming in so light.  One possible factor is the lower dynamic chilling hours.  While we had sufficient chilling hours for almonds last winter, the days were quite warm, and this could have impacted almonds as it did other crops.  Three years of drought has also lead to higher build up of salts in the soil and lower deep soil moisture. 

Our Nonpareil receipts are off 27% on 5th leaf and older blocks, and off 18% overall.  Our pollinators are off 8% on 5th leaf and older, and off 2% overall.  As so much of our crop is from the west side of the valley, we anticipate the state-wide crop could be better.

Carmel prior to shaking

Carmel prior to shaking

OUTLOOK:

Growers have remained hesitant to sell given uncertainty (or disappointment) about their crop volume and the drought.  This has impaired handlers' ability to make sufficient offers and pushed pricing up.

Almond pricing is $ 0.25/lb. above the record highs seen in 2005.

Generally other tree nuts are expensive, which helps almond demand.  Cashews is one exception; trading at 15-20% lower, and U.S. consumers prefer cashews over almonds in mixed nuts.   Walnuts, pecans, and macadamias are trading much higher on a kernel basis, but on an in-shell basis they are cheaper than Nonpareil In-shell, so we anticipate lower demand in China.

In most seasons, Mediterranean almonds trade at a premium over California origin due to the small volume available and demand from niche markets.  In seasons like this with larger Mediterranean crops, the premium often disappears for some Mediterranean varieties.  Early in the week, the cheaper option of Spanish almonds, Unselected Valencias ("Comunas"), traded at a discount of about 7% to STD5 (Unsized California varieties).  Shipments to Europe should decline this season with the larger crops there.  However, the severe shortage of Turkish hazelnuts could help almond demand in Europe.

The big questions are how much current prices will impact world demand, final receipts for this crop, and water availability for the 2015 crop.  Long-term water concerns may trump other market fundamentals. 

Posted here is the August 2014 Position Report

The next position report is due for release Thursday October 9

Please feel free to call or email us with any questions or feedback.

Paul Ewing      Dennis Soares