Almond Market Update – November 2023
The Almond Board of California released the October 2023 position report:
Shipments were 247.4 million lbs. vs. 214.6 million lbs. in 2022: +15.3% for the Month (+7.25% YTD)
U.S. -13% (-1% YTD)
Exports +27.7% (+10.5% YTD)
Western Europe +23% (+12% YTD)
India +48% (+38% YTD)
Middle East / Africa +69% (+8% YTD)
China / Hong Kong/ Vietnam +8% (-14% YTD)
Japan +9% (+26% YTD)
South Korea +12% (+27% YTD)
Canada -8% (+3% YTD)
Central / Eastern Europe -33% (-28% YTD)
Latin America / Caribbean -29% (+5% YTD)
October Shipments – The figure meets or exceeds industry expectations. While most were initially expecting a similar figure, the challenges with late harvest and meeting specs led some to think we may not hit expectations.
October Sales were 250 million lbs. vs. 243.5 million lbs. in October 2022. This is bullish news.
Committed (Unshipped) stood at 677 million lbs. vs. last year’s 695 million lbs.
Sold / Shipped Combined was 1.35 billion lbs. vs. 1.33 billion lbs. a year ago
The Industry Sold Position was 40% of total supply – vs 39% a year ago. This is assuming a 2.6B crop and normal loss & exempt. Assuming a 2.4 billion lb. crop with 4% Loss & Exempt (with the much higher inedibles), the industry is 44% sold on total supply.
The 2023 CROP
Insect damage remains at 3.99%, still running almost double last season.
Harvest remained very late and challenging with poor drying conditions for those harvesting in the late season. Crop receipts continue lagging as a result. The last of the crop is wet and still coming in. It’s been a long time since the industry received much crop in November.
Yields for us remain similar, averaging down 14% for mature orchards 6th leaf and up.
There seems to be more wide spread consensus that the crop should not hit the estimate. Expectations tend to be around the range of 2.4 billion lbs., or below.
While we think most of the focus should remain on the current supply/demand dynamics, the focus often shifts to the concern around “next year’s crop”. This has been going on for several years with some market bears warning “oh but wait for next crop, it’s going to be huge, 3 point x billion gazillion pounds”, meanwhile most pre-bloom predictions have been terribly inaccurate as the crop has declined 3 years in a row. While we agree there is generally a strong bud set, and there is pretty good crop potential for a rebound, barring weather, bearing acres remaining, etc., we think the impact on yield potential due to economics is underestimated, the weather is unknown, and acreage removals could speed up faster than most expect. We spoke with three crop consultants from around the state:
Kevin Ross, a crop consultant with Simplot since 2016, covers mainly the California Delta, Solano and Colusa Counties. When asked if he’s seeing his almond growers cut back on spending, he said “definitely, and it’s really come home to roost with post-harvest. I basically only had one grower apply post-harvest fertigation. Most growers aren’t doing any post-harvest fertilizer and the impact on next year’s crops becomes the question.” He is concerned but pointed out it’s not his money to spend. “When you cut back on fertilizer you don’t see the impact immediately, it’s a process that is internalized by the tree. They are forecasting a wet year, and if that comes during bloom, we are right back at where we were (in 2023.)”
Chris Morgner, an independent crop consultant of Agri-Valley consulting with 40+ years of experience, covers largely Madera and Merced counties, as well as parts of Stanislaus and Fresno counties. He said they are “definitely seeing cutbacks in inputs, because growers didn’t receive the amount of money for 2022 crop they are used to and (it’s continuing that way) for 2023 crop. About 50% of growers cut back on fall nutrient plans. Most clients did what Agri-Valley always promotes, which is a boron foliar spray. Dry fertilizers, compost, amendments (gypsum etc.) were slashed to the bone. Post-harvest nitrogen was not applied for most growers, and the late harvest contributed to that. The focus was on getting nuts out of the orchards and this harvest took forever.
Going forward we are prioritizing winter sanitation, and we are seeing acceptance of that among our growers. Nothing will substitute for that. Last year the (wet) weather and cost (for sanitation) led to some growers not doing it. Some opted for mating disruption but that’s not a substitute, some areas the NOW population is bigger than what can be overcome with mating disruption and sprays.
We are seeing potassium deficiencies more than nitrogen (because of the cutbacks in fertilizer). Growers are planning other cutbacks including putting less bees out for bloom.
Looking ahead there is a good bud set. We had a wet year and saw good spur growth. How does that translate for 2024 (with the grower cutbacks) we don’t know.
One last point, having sufficient personnel affects yields a lot. Most growers are understaffed and that’s not going to get any better (with current economics of almonds). How is that going to affect the next crop? Irrigation is the biggest factor; water is the best fertilizer. You gotta have people to accomplish the tasks at hand and irrigation is the top of that heap.“
Aaron Beene, a crop consultant with Simplot for 22+ years, covers mainly the east side of Merced and Stanislaus Counties. “From the standpoint of feeding the trees to maximize production (100% basis as the starting point), most growers are cutting back at least 30% at the minimum, including post-harvest fertigation. If they were putting on nutrients for 3,000 lbs. per acre, now because of budget constraints and (almond) pricing, they are cutting back to shoot for maybe 2200 to 2400 lbs. per acre. Only about one third of my growers even did post-harvest foliar sprays. Growers are planning to cut back on extras like dormant sprays. 25% of growers are not applying any post-harvest applications finding it hard to financially finish the year. These economic cutbacks will have an impact on potential 2024 crop.”
LAND IQ should come out with their acreage update soon and we expect that will point out some of the heavy acreage removals we are seeing. The current economics will continue to prompt heavy removals. As Chris Morgner said, “the old orchards are coming out. You can’t make any money on 1800 pounds (per acre).”
Before talking about a potential giant crop “next year”, we hope the pre-bloom crop estimators will speak with crop consultants (PCA’s) from around the state, orchard removal companies, etc. and get a balanced look at things. The dire economics of growers today are impacted by uniformed or unbalanced predictions about hypothetical crops in the future.
The Domestic Market continues to lag
The gap between retail pricing and grower pricing has been very disappointing. We don’t know what exactly can be done but we think more light should shine on how bad it is. Mitchell Moreda’s Almond Board leadership project uncovered how significant the gap is.
Buying Activity / Outlook
Pricing firmed through late October then softened slightly (mainly just offers for nearby positions) in recent weeks.
Carry-in remains less of a factor as it’s mostly sold through.
The supply/demand situation is begging to point toward a tighter carry-out. A 2.4 billion lb. crop with 4% Loss & Exempt would give us a total supply of 3.1 billion lbs. This would be a decrease in total supply of 250 million lbs. from 2022 crop year and 370 million lbs. from the 2021 crop year. If 3.1 were the case, if the industry can keep pace for shipments of 2.6 billion lbs. or higher, we could be looking at a much more reasonable carry-out. After recognizing the chance for a tighter carry out, that’s when the bears point to “next crop” without recognizing how uncertain yields are during these unprecedented times.
Sales still need to remain at good pace for continued good shipments. We anticipate buying interest could pick up following this report.
Paul Ewing Dennis Soares
November Position Report – Tuesday December 12, 2023