April 2021 Almond Market Update

California shipped a surprisingly strong 266.7 million lbs of almonds in March, the second biggest month ever for the golden state and up 28.1% up from shipments of 208.2 million lbs in March a year ago. Phenomenal.

With domestic shipments down 11% versus last March when pandemic stocking kicked in (71.2 million versus 79.6 million lbs), shippers have just about every major export market to thank for the massive flows. Notable March figures include India (24.3 million lbs, up 62%), China (7.4 million lbs, up 190%), South Korea (9.8 million lbs, up 105%), Japan (9.7 million lbs, up 15%), Western Europe (74.8 million lbs, up 42%), Middle East with a nod to Turkey (25.7 million lbs, up 35%) and little Morocco turning into a significant player at these price levels (10.0 million lbs, up 179%).

Season to date shipments are now 18% ahead of last year (1979 million lbs versus 1682 million lbs). Season to date country totals underscore the disparate performances of individual markets in a very low 2020 crop price environment. Whereas the domestic market is only 4%, we see strong responses from price sensitive markets; India up 51%, China up 59%, South Korea up 45%, Eastern Europe up 38%, North Africa up 60%. Indeed, fully half of the total season to date increase of 297 million lbs can be attributed to India (96 million lbs) and China (49 million lbs).

One interesting call-out is strong Western European season to date shipments, up 12% (472.8 million lbs versus 421.0 million lbs). For a “mature” market this is impressive growth, especially in contrast to the US domestic market growth of 4% where new products and uses for almonds are thought to be leading the way.

Strong new sales in March of 191 million lbs kept commitment numbers well ahead of last year (811 million lbs versus 555 million lbs, up 46%). Uncommitted inventory edges closer to last year levels, now only 98 million lbs more than at the same time a year ago versus a gap of 141 million lbs at the end of February. Committed and shipped as a percentage of what was initially a daunting total supply (450 million carry plus 3100 million lbs crop) stands at 80%, actually slightly better sold and shipped than any end of March total since 2004! Usually we see end March in the 70% to 79% range.

Crop receipts added 6 million lbs in March, to total 3093 million lbs. This is a welcome slowdown from the 62 million lbs seen in February and strongly suggests that 3100 million lbs should be about it for the 2020 crop.

Okay a lot of numbers here, surely taxing even the toughest reader. Please hang in there. The point is that California is dealing with a bumper crop, selling it and shipping it out. Are prices impressed yet? It’s a mixed bag. With a heavy carry-out still anticipated we are seeing the bottom end of the market stubbornly stable, while certain items (higher grade NPX and inshell) are starting to dwindle, causing more buoyant pricing. Standard 5’s have remained in the $1.75 to $1.80 FAS range for most of the past month, with sized California’s remaining at steady premiums. Meanwhile, Nonpareil Extra 25/27’s appear to be running thin, with values adding about 10 cents per lb over the period, most recently seen near $2.15 per lb FAS. Buyers are now turning to sizes on either side of 25/27, with both NPX 27/30 and NPX 23/25 enjoying a resurgence. Inshell is in strong demand, particularly the “value alternative” Independence which is now in relatively short supply and most recently seen close to $1.65 per lb.

If there were any doubts, today’s report emphatically reaffirms that almonds enjoy enviable demand elasticity. The market has answered low pricing with sales and shipments to meet the challenge of bumper supply. With 4 months to go in the season, strong commitments assure that April through July will be good shipment months. Nevertheless, to inject a note of cautious reality, even if shipments were to increase by 18% over the next 4 months (the current season-to date pace) there will still be a carry-out of close to 700 million lbs and relatively high carry-out ratio of 25%.

With that said, confidence with every good shipping report is on the rise. We noted last month that a bottom appears to be in place. Buyers appear to have the same opinion and are taking advantage of low prices. The increasingly balanced supply / demand scenario will now put even more importance on opinions for the 2021 crop. Pundits will start putting their forecasts out in the next week or two, with the Subjective arriving in early May. With strong demand assured at current market levels, our opinion is that there is more upside than downside price risk over the next month as 2021 crop size is debated.