February 2019 Almond Market Update

California handlers shipped 186.9 million lbs in February, down 1.7% from shipments of 190.1 million lbs in February a year ago. In the context of the previous five years when shipments ranged between 140 and 160 million lbs, however, this is a strong performance.

As anticipated, China/Vietnam imports of 5.5 million lbs were off a sharp 15.9 million lbs compared to last February as high duties continue to steer Chinese buyers to Australian almonds. The shortfall was made up by USA (up 4.7 million lbs at 58.4 million lbs), India (up 5.0 million at 14.0 million lbs) and the Middle East (up 3.0 million lbs at 19.1 million lbs).

The domestic (USA) market continues to reflect strong, consistent growth driven by the roll-out of plant based products, underpinning firm values we are seeing for pollinator and ingredient almonds. Indian imports are now 2% ahead of last year’s season-to-date totals and the February number will surprise some naysayers who have been reporting a dull local market and reflects robust consumption as product is moving through distribution channels despite economic challenges. After a slow start the Middle East is now 4% ahead of last year’s pace as markets have adjusted to duty and currency challenges.

China/ Vietnam season-to-date shipments are down 23% or 44 million lbs. A breakthrough in the trade negotiations continues to hold promise, but timing for a deal not certain. Nevertheless it is fair to comment that for California almonds the situation could only improve from here. California has managed the season remarkable well given the reduced demand from a major region, boding well for anticipation of increased supply out of the upcoming crop. We are already seeing Chinese demand for new crop inshell ($2.15 per lb in case you were interested).

Commitments numbers show new sales of 150 million in February (a new record for the month) drawing uncommitted inventory (670 million lbs) very close to last year levels at the same time (657 million lbs).

Receipts are about as expected, adding another 10.8 million lb to bring the 2018 crop to 2,262 million lbs. We are keeping our 2018 crop final forecast number at 2275 million lbs, little changed from the 2017 crop which ended up at 2262 million lbs.

Over the past month we have seen steady to firmer pricing, particularly for the bottom end of the market. Standards which were noted at close to $2.70 per lb a month ago are now seen near $2.80 per lb. SSR’s have traded in a tight range between $2.83 and $2.90 per lb, while Supremes capture only a few extra pennies. Nonpareil Extra No.1s are still hard to find and will find buyers between $3.05 and $3.20 per lb depending on the market. Nonpareil inshell softened slightly mid-February, but have since firmed to above $2.25 per lb as Indian buying emerged.

New crop pricing, despite bloom weather concerns, continue to be bid /talked about at 20 to 30 cents discount to current crop. The driver behind the discount is an anticipated increase in bearing acreage and the increased bearing potential as young orchards move into prime bearing stage. Meanwhile, weather has been far from ideal with February being unusually wet and cold throughout the valley. In general we would characterize conditions worsening from south to north. We are seeing nutlets start to emerge in the south, but it is far too early to offer a prognosis.

In summary, the February shipment report brings few surprises to a market that is already anticipating good demand and constraints on availability between now and new crop. With committed and shipped (1905 million lbs) now standing at over 85% of the sellable crop (2275 million lbs less 2%) California sellers are in a comfortable position. We can expect firm pricing to continue on current crop, while new crop will be more swayed by crop opinions and forecasts over the next couple months.

Best regards

Jonathan Meyer
Treehouse California Almonds, LLC