Almond Market Update – December 2020
The Almond Board of California released the November 2020 position report
Shipments: 263.1 million lbs. vs. 235.9 million in 2019 – +11.6% for the month +21.5% YTD
U.S. +11.5% (+12.9% YTD)
Exports +24.9% (+24.9% YTD)
Western Europe +11% (+11% YTD)
India +15% (+82% YTD)
Middle East / Africa -24% (-2% YTD)
China / Hong Kong/ Vietnam +100% (+31% YTD)
Japan -28% (-20% YTD)
South Korea +47% (+32% YTD)
Canada -21% (-7% YTD)
Central / Eastern Europe +32% (+24% YTD)
Latin America / Caribbean +82% (+116% YTD)
Crop receipts of 2.4 billion lbs. are up 15.9% from a year ago.
Insect Damage stands at 1.36% vs. 1.63% a year ago
Mummy shaking conditions have not been ideal due to low rainfall and fog, but the recent weather are providing a better window for mummy removal. With low rainfall less NOW die off, so the winter sanitation can be more critical.
November Shipments met expectations. Container / Shipping line challenges again contributed to a figure below potential as millions of pounds were rolled into December.
November Sales were 235 million lbs. vs. 191 LY. Given how far ahead the industry was and continues to be on sales, this seems on the high side of expectations and one of the positive surprises in the report.
Committed (Unshipped) stood at 1 Billion lbs. – up 55% from last year’s 650 million lbs.
Sold / Shipped Combined reached over 2.0 billion lbs. vs. just under 1.5 Billion a year ago, up 36%.
The Industry Sold Position reached 60% of total supply vs. 53% a year ago.
Back around July bearish sentiment hit a low point. Overly pessimistic predictions led to huge sales at very low prices. Predictions such as: We could see an 800 million lb. carry out next year. We’ll be lucky if consumption grows at 10% on the backs of such a large consumption base, and with COVID that’d be an accomplishment. Europe and the US are established markets and we may see 5% growth in those markets. Who is the industry going to sell all these almonds to in India with the importers there suffering losses from the recent price crash? China can’t grow much with all the tariffs and trade war. Where are we going to sell all these almonds? Hindsight being 20/20…
Fast forward to today, Sellers are running out of reasons to remain bearish, and also running lower on almonds to sell. With the industry about 60% committed by November 30 and the season pools generally more sold than call pool; season pools seem comfortably sold. Some call pool growers have been slowly selling into this market, but the overall grower need to sell for cash reasons has been much less than most anticipated. This is perhaps due to government support programs for growers related to COVID and trade wars, which softened the blow of the very low market levels. The point of all this being, in recent weeks, there’s been less available offers than earlier in the season, pushing pricing gradually upward.
Currencies changed following stable months, with the weaker USD making these low almond prices even cheaper for overseas buyers. The USD to Euro is at 1.22 today.
Storage / Lack of Bins are less of an issue now as most processors are past the peak storage issue with some huller/shellers winding down and strong sales on the books.
China is showing to be a growth market again with November being a critical month for the market, as much of that cargo is bought for their very busy Chinese New Year period.
India reports working through the very big shipments so far, and likely to continue to buy very heavily this season. Consumption is benefiting greatly from the immunity health messaging, low almond prices, and growth of online sales platforms.
The Middle East is not performing great, but Ramadan is earlier (April 12) and buying should continue, to cover those needs.
Western Europe is actually up 11% YTD and some key segments like major snack buyers, report growth of over 20%. Home baking is on the rise, but food service sales are way down. Retail prices still have a long way to go before they fully reflect origin prices. Overall, this market should continue to greatly surpass initial expectations, however it’s unclear the impact of unsold Spanish crop on their final growth for the season.
USA shipments are impressive at 13% YTD. Much like Europe, consumption is highly varied by industry and retail prices not fully reflecting the price drop. In the meantime, we see more promotions/discounts at retail that are likely a part of this demand growth. The Section 32 purchase by the US government was small to start, but may see an additional purchase this crop year (Good Luck Almond Alliance!)
Concerns about Water Supply for 2021 and beyond is contributing to the more bullish sentiment.
Crop Receipt consensus still hovers in the 2.9 to 3 billion lb. range and the next couple reports should be insightful. Unlike the surprisingly bullish demand, the supply news has been less eventful so far.
Paul Ewing Dennis Soares
Further Info: November 2020 Position Report
December Position Report – January 12, 2021