Almond Review - May 2016

Almond Review – May 2016

May 11, 2016

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

April shipments were 167.5 million lbs. vs. 151.1 million lbs. last season – up 11%

DEMAND

This shipment figure is on the high side of industry expectations. Total shipments for the season are down 5.7%

We experienced rising prices since the last position report, which spurred additional buying. Demand was strong during April 2016, with sales of 177 million lbs. vs. 168 the previous April (which was also a strong month). The heavy commitments were anticipated.

Shipment re-cap for major markets:

Month Crop year

U.S.A. -13% -9%

W. Europe +6% +6%

Middle East +60% -15%

India/Pakistan +60% -3%

China/HK +81% -2%

Japan -18% -5%

THE 2016 CROP

Good growing conditions have continued, though with sporadic and unusual storms. In the hills on the west side some areas received 4-5 inches of rain which came come down into the valley like a river through some of the farms. We’ve seen very limited hail damage in various counties from eastern Stanislaus to western Fresno/Merced and down into Kern. Recent heavy rains followed by the upcoming hot days, increases disease pressure and most growers sprayed or are spraying fungicides to protect tree health.

Kernel sizing continues to look larger than last season.

Harvest timing appears early again.

New growth on the trees continues to look excellent which will help 2017 crop potential.

Water Supply has improved considerably. All growers on the west side look to have enough water to get them through the year. Water cost, which some paid $1300/foot for this season, should be more reasonable for 2017.

OUTLOOK:

Market firming started a month ago with the improved commitment figure seen with the March position report. The acreage report, released April 27, is normally a non-event but this time showed 45,000 acres removed, which further strengthened the market. This was up from 30,000 the previous year and 10,000 the two prior years. Estimated bearing acreage of 900,000 was surprisingly low. So far NASS has located 55,000 acres that were planted in 2012. The subjective estimate was also on the low end of expectations that ranged from 2.0 to 2.2 billion lbs.

Today’s report shows committed shipments of 433 vs. 365 million lbs., up 18%. This indicates a likelihood of continued good shipping months ahead. Emerging markets responded quickly to the low prices and showed very heavy shipments in April and likely will for May. Turkey for example was up over 400%. The entire regions of the Middle East / Africa and South/Central Asia, were each up 60%. Uncommitted inventory of 477 million lbs. is a major reduction from last month’s 649 million, but still up 21% from a year ago.

In summary, we see bullish market conditions and the next significant wild card will likely be the objective estimate in July. The other unknown which will affect short-term pricing is how much pent up demand has already been satisfied, and how much remains to be covered.

Almond Review – May 2016