August 2016 Almond Market Update

Treehouse Almond Market Update September 9th, 2016

California shippers bolted out of the starting gates at a blistering pace in August, dispatching a record 170.0 million lbs in the first month of the 2016 crop season. While strong inshell shipments were expected, the 34.8% increase versus last August shipments of 126.2 million lbs becomes possible only when all major markets pull their weight. Domestic shipments were up 9% at 58.8 million lbs. Western European shipments driven by strong German and Spanish numbers were up 39%. Canada and Mexico pulled 54% more. Surprisingly Middle East shipments were up 47%, with Turkey making up for relatively flat Dubai shipments. As widely anticipated, India was the star of the show, but at 35.0 million lbs or over 1050 containers (up 146%) their performance was even a little better than expected.

So shipments were terrific, what about sales? Everyone has been talking about the quiet market and buyers waiting for crop news. Perhaps not so. It seems that new crop business has been quietly, but actively booked. The August report is the first time that we get a look at new crop commitments, and commitments for both domestic and export are well ahead of last year’s levels. Total commitments of 481.8 million lbs are more than 110 million lbs (30%) ahead of last year at the same time.

As a percentage of total available crop (and yes we are constrained to use the 2050 million lb Objective forecast here and a typical 2% loss) California is now sold and shipped at 32.4%. This compares to 26.8% at the same time a year ago and is back to more typical levels for this time of year (32.8% in 2013 and 31.9% in 2014).

Additional help to the numbers game came from the Almond Board loss and exempt calculation reducing the carry-in by 10 million lbs, from a previously calculated 422 million lbs to the now official 412 million lbs. We note again, because it is worth noting, that this is a far cry from the 500 million lbs plus carry-over that was in the market consciousness 6 months ago.

On the supply side, receipts in August were reported at 359.4 million lbs, up slightly from receipts of 344.3 million in August last year. Still too early to tell anything from this number. We are seeing nonpareil yields per acre in the south (our area) well up (about 25%) from last year, while central is up more modestly and northern growers are a little off last year’s levels. However, we remind that nonpareil in our area was off sharply last year and in general we are seeing yields still a little below those seen in 2014. The crop is coming in cleaner than last year and nonpareil sizing a little larger. The acreage number continues to be the wild card, nevertheless on what we know at this point we would characterize the crop as good but not spectacular and feel comfortable with the 2050 to 2100 million lb range as a realistic expectation.

The market over the past month has been behaving as the crop is perhaps a little higher than this, with buyers concentrating on nearby positions and seemingly confident that deferred needs can be bought later. We have seen the bottom end of the market stay remarkably steady with standards hardly budging from the $2.20 level. Sized California’s have drifted off about 5 cents or so, while Nonpareils which had been enjoying very strong premiums to California’s have seen sharper declines. Nonpareil Extra 27/30’s were most recently seen in the $2.75 to $2.80 range, about 15 to 20 cents per lb lower than a month ago. Manufactured almonds were most recently seen in the $3.10 to $3.15 range for sliver and slice.

Today’s report lines up on the sellers side, with only a few weaknesses to temper the message. In summary, lower almond prices are working to boost sales and shipments. In addition, it is anticipated that buying still needs to be done. Europeans are just returning from summer, Indians have not booked past October, Chinese buying to our knowledge has been moderate, domestic USA buyers are resetting their programs, the Middle East seems to be working around the hang-over in Dubai. At the same time the crop still has the potential to surprise as we start getting into pollinator receipts. California sellers would be well served to keep prices steady and sales flowing until the supply is better known.

Best regards,

Jonathan Meyer
Treehouse California Almonds, LLC.