Almond Market Review – May 2018
The Almond Board of California released the April 2018 position report
April shipments were 176.4 million lbs. vs. 152 million lbs. in 2017 – up 16.1%**
** One handler failed to report 10.6 million lbs. of 2016 crop shipped in the 2017/2018 crop marketing year, which were all added into this month’s report. If removing all 10.6 from the 176.4, the shipments were 165.8 million lbs., up 9% vs. April 2017. The industry is up over 12% YTD
U.S. shipments: +10.4% YTD
Exports: +12.8% YTD
Another solid month, in-line with expectations if considering mid 160’s for the actual April shipments.
Europe is up 14% YTD but flat for the month, and seems in need of significant coverage going forward.
India is up 23% YTD and the flat April shipments may give some relief to over-stocked importers. This, like China, is a very unpredictable market. We saw again recently, where the consensus was that India was done buying for several months, and they returned to buy the next week.
China/HK was up slightly but this does not mean much as the impact of the tariff increase is likely not reflected yet. The expected impact of the tariff increase is larger than we originally anticipated, though some Chinese buyers are betting it will not be too significant or the tariff will go away, as they continue covering new crop. The new crop purchasing could also reflect optimism about the overall market, as product is traded globally out of Hong Kong.
New sales of 108 million lbs. led to commitments of 445.4 million lbs., down 9.5% from a year ago.
Growing conditions continue to be very favorable for the 2018 and 2019 crops. There are signs of decent navel orange worm pressure again and growers are preparing to try to avoid another high insect damage season. We continue to expect good kernel sizes, high doubles, and a later harvest.
The 2.30 billion lb. subjective estimate has not been widely accepted by buyers so the objective estimate is even more highly awaited.
REVIEW & OUTLOOK:
Shipped/Committed reached 2.166 billion lbs. (up 157 million lbs. from a year ago). This is 83% of total supply (using a 2.26 billion lb. crop) or 98% of the saleable 2017 crop.
With inventory running low on current crop, and anticipation of a potentially low subjective estimate, pricing firmed in the past few weeks, particularly for pollinators.
Low April sales and commitments point for potentially lower shipments for May-July. It is unclear how much this is a sign of low shipments to come and/or a sign lack of coverage by traders and/or buyers. Due to lack of supply, it does not seem possible to continue the 12% shipment growth. Given the tariff situation in China, and the over-stocked under financed India situation, it does not seem likely either. If China and India just take 1/3 of what they did last May-July, with the rest of the world continuing the same growth pace, shipments would be essentially flat for the remainder of the season, reaching 2.30 billion lbs. shipped and a carry-out in the low 300’s
Going into the 2018 season, the demand growth should continue in the mega markets of North America, Europe, and arguably moderate growth in India as well. China is the biggest wild card, but if the crop is in the range of 2.30 or even 2.40 billion lbs., a decline in China could be mediated by continued growth in the other major regions. One of the big debates going forward is the likely demand impact of starting out pricing above 2017’s starting levels.
May Position Report – June 11
NASS Objective Estimate – July 5
Paul Ewing Dennis Soares