Almond Market Update – January 2021
The Almond Board of California released the December 2020 position report
Shipments: 256.9 million lbs. vs. 205.9 million in 2019 – +24.7% for the month & +22.1% YTD
U.S. +5.7% (+11.5% YTD)
Exports +32.1% (+26.3% YTD)
Western Europe +15% (+12% YTD)
India +63% (+79% YTD)
Middle East / Africa -16% (-5% YTD)
China / Hong Kong/ Vietnam +354% (+62% YTD)
Japan +3% (-15% YTD)
South Korea +76% (+42% YTD)
Canada +14% (-4% YTD)
Central / Eastern Europe +47% (+29% YTD)
Latin America / Caribbean +157% (+122% YTD)
Crop receipts of 2.87 billion lbs. are up 20% from a year ago.
Nonpareil Receipts so far are up 168 Million lbs. from last year’s total, and up 222 million lbs. from a year ago. Independence so far is up 67 million lbs. from last year’s total, and up 73 million lbs. from a year ago.
Mummy shaking conditions improved with more foggy conditions in recent weeks.
Concerns about Water Supply for 2021 and beyond continue. After a fairly dry 2019-2020 (61% of normal rainfall), the current rain season is only at 31% of normal so far. (Precipitation Index). State-wide reservoir levels are well below average as well (Reservoir Conditions as of January 11, 2021)
Acreage Removals appear to have increased dramatically from last winter, spurred by the large drop in almond pricing. Generally additional removals happen when prices get low, but the below graphs also demonstrate the removals spikes seen during the drought around 2014-2015. We expect a more modest growth in bearing acreage for the 2021 crop, given the heavy amount of removals. Next winter will likely be another above average removal period.
December Shipments were within the range of expectations and impressive given the continued logistics challenges.
December Sales were 172 million lbs. vs. 166 million lbs. last December. No surprises here.
Committed (Unshipped) stood at 920 million lbs. – up 51% from last year’s 610 million lbs.
Sold / Shipped Combined reached 2.2 billion lbs. vs. 1.66 Billion a year ago, up 33%.
Crop Receipts were on the high side of expectations and industry consensus is perhaps around 3.05 billion lbs. at this point. Much of the supply growth is in Nonpareil and Independence, which matches up well with where demand is growing in China, India, Established Market Snacking, etc.
The Industry Sold Position reached 64% of total supply vs. 59% a year ago. This is based on a gross crop of 3.05 Billion lbs.
Buying activity has been strong in recent weeks and is expected to continue. The Middle East needs to cover Ramadan needs and with all the logistics challenges, those purchases need to happen as soon as possible. Despite the strong shipments to India, they have remained active buyers for January/February. Europe has also remained active and we expect this trend to continue as well.
The market outlook appears firm for the near term, with some expecting a slight price bump coming out of this report, thinking the heavy shipments and solid sales outweigh the strong crop receipts. We’ll receive another position report in a month, at which point speculation on 2021 crop potential should become a larger part of the discussion. Currently the 2021 crop is trading at a slight premium to 2020 crop, indicating either the great value current prices present for buyers and/or how unappealing current prices are for most growers.
Since mid-summer, the USD has weakened further, making up for about half the increase in pricing that buyers have seen off the very bottom of the market.
To understand why shipments are setting records 6 months in a row, and up an incredible 22% for these first 5 months of the crop year, we think the below chart of “starting prices” from August pretty well sums up the “why”.
Paul Ewing Dennis Soares
Further Info: December 2020 Position Report
January Position Report – Thursday February 11, 2021