Bulls take center stage in almond market
May 14, 2014 by Greg Northcutt
inSharThe USDA’s subjective forecast for California almond growers to produce a 1.95-billion pound crop this year caught the industry by surprise.
The USDA’s subjective forecast on May 1 for California growers to produce a 1.95-billion pound (kernel) crop this year caught the industry by surprise. Most observers had expected the 2014 crop to be similar in size to last year’s production of 2 billion pounds, or higher.
The predicted 2.5-percent decline in production this year reflects an expected 4.6 percent drop in average yields from 2,380 pounds per acre in 2013 to 2,270 pounds in 2014.
“This is bullish for the market,” says Paul Ewing, Commercial Director with RPAC, LLC, an independent almond processor, based in Los Banos, Calif. In fact, within hours of the USDA announcement, prices to growers for 2014 California almond varieties rose 15 cents a pound to $2.65 or more.
Results of the subjective forecast is based on opinions expressed by a sample of growers surveyed by phone from April 15 to April 29.
Ewing attributes this year’s expected smaller crop to two factors:
• A natural drop in yields of Nonpareil, California’s mostly widely-grown variety, as the trees rest up following record yields last year. “The pollinator varieties, especially Carmel type, look stronger this year,” he says.
• The on-going drought, which is affecting availability of water for growing the crop. The impact varies from little, if any reduction in supplies of surface water for growers in some areas, particularly on the east side of the central San Joaquin Valley and farther north, to the West Side where deliveries of canal water to some growers have been cut off or greatly reduced.
This year’s drought is also affecting prospects for the 2015 almond crop. As Ewing points out, the buds that will produce next year’s nuts are forming and developing this year. Development of those buds could be restricted on any trees that run short of water this season.
The 2014 subjective report forecasts forecast total almond-bearing acreage of 860,000 acres this year. However, that figure doesn’t include third-leaf trees, which can produce anywhere from about 10 percent to 30 percent as many nuts as they will when mature. “Those trees should offset some of the impact of this year’s lighter Nonpareil crop,” Ewing says. “The amount of new almond acreage keeps ramping up every year. There’s more this year than last year.”
The hot weather following this year’s bloom could have impacted crop size by limiting kernel development as happened last season, Ewing adds. The industry will get a better idea of this year’s production prospects on June 30, when the USDA releases its 2014 objective almond forecast. That is based on nut set and kernel weight from a sampling of orchards.
Meanwhile, prices of 2013 almonds have been on a roller coaster. “They’ve been up and down,” Ewing says. “But, overall, this has been one of the best seasons ever for almond prices.”
In early May, growers with last year’s nuts were getting around $3.20 per pound, depending on kernel size, he reports.
These prices reflect growing demand in a few markets, including the United States, and a short 2013 Mediterranean almond crop.
Also, some Chinese and Indian almond buyers recently returned to the market. “Up to then they hadn’t been heavy buyers of the 2013 crop,” Ewing says. “So, it’s good to see them buying new-crop nuts.
The drought in California is also helping to bolster almond prices. “It’s created a lot of worry for both buyers and sellers and has brought some firmness to the market,” he adds.