Today the Almond Board of California released the September 2014 position report.
September shipments were 163 million lbs. vs. 177 million lbs. in Sept 2013 (Down 8%)
September shipments were in-line with industry expectations.
The U.S. was off 2.3% and Canada was off 8%. North America has been the most active market over the past few weeks.
Western Europe was flat. Central/Eastern Europe was off 66% (due to Russian market closing to US almonds). The entire region is off 20% for the crop year.
India was up 40%. After two strong shipment months (42.8 million lbs. vs. 22.5 million) and mediocre Diwali season sales, stocks are high. We do not expect much buying from India for a while.
China was off 38%. Buying volume has been sluggish as Chinese buyers see minimal opportunity to profit at today's pricing. Forward coverage there seems low, so we may still see decent demand in the short-term (ahead of Chinese new year).
Middle East / Africa was off 4% for the month and 15% for the crop year. Stocks are reported as low in Dubai and the region in general. It seems they need to buy in the short-term.
Commitments were 386 million lbs., off 22%. This is at least partly due to the hand to mouth buying approach being taken in some markets.
THE 2014 CROP:
Harvest is complete throughout most of the valley.
In the North we see a very inconsistent crop. In the South, the crop is off but not as consistently off as the West side. The best crops appear to be on the East side from Fresno County up to San Joaquin county.
So far our Nonpareils are off 24% on fully mature blocks but just 12% when factoring in 3rd and 4th leaf crops. Our pollinators are off 12% on fully mature blocks and 4% overall.
Almond pricing is 0.35/lb. above historic highs seen in 2005. The US Dollar strengthening in recent months has further increased the almond cost to buyers overseas.
Current pricing has not hit the consumer, and will gradually make its way through over the coming months and year. Pasteurized Nonpareil Supreme in a three pound bag are still 4.99/lb. at Costco. We see customers reformulating mixes, and in some cases the reformulations will not go into effect until 2015. In Japan for example, wholesale manufactured almonds are still priced based off input costs from several months (80 cents) ago, and today's higher pricing will be phased in over the coming 6 months.
With summer-like weather recently, the severe drought in California continues as a serious concern and major factor in the market. Some orchards, particularly on the West side, will not have sufficient water for post-harvest irrigation, which is critical to producing a good crop in 2015. With the salt build-up in the soil, many orchards do not have a healthy appearance. If we receive a late winter, the ability to move water from the north to the south will be limited due to environmental pumping restrictions through the Delta. The weather should have a large influence on the market this winter.
Market sentiment is mixed. With the uncertainty regarding 2015 supply and consumption, the almond market outlook is extraordinarily uncertain.
Posted here is the September 2014 Position Report
The next position report is due for release Tuesday November 11
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