August 2020 Almond Market Update

California shippers finished the 2019 crop year strongly, with July shipments of 180.1 million lbs eclipsing last July shipments of 154.2 million lbs. Contributions to the robust July number were widespread, but in particular we can point to USA (up 5.3 million lbs) and India (up 8.8 million lbs). Strong shipments to Turkey (up 1.45 million lbs), South Korea (up 1.5 million lbs) and Morocco (up 3.7 million lbs) also helped.

With July being the last month in 2019 crop season, California shipments for the season can be reported at a total of 2372.4 million lbs, up 4.8% from the 2018 season total of 2264.0 million lbs. Given the marketing challenges in the second half of the year (covid related lockdowns and falling prices creating lack of confidence) this performance is impressive. The following might best communicate shipments for the season to significant destinations.

% Change

Major Regions
Other Americas +8%
Asia/ Pacific -7%
Western Europe +5%
Central and East Europe +20%
Middle East +26%

Top 10 Countries, ranked in order of size
USA +5%
India +11%
Spain -2%
Germany +21%
China / Hong Kong -23%
UAE +25%
Japan +5%
Italy +15%
Netherland +2%
Turkey +70%
Canada -2%

Continuing high tariffs in China have turned Chinese buyers to Australia, while direct shipments to Morocco (28 million lbs versus 7 million lbs last season) cut into volume that was previously being routed through Spain. In general a very successful year for California shippers amidst a global pandemic, which speaks to the reliance of demand.

About 4 million lbs of crops receipts trickled in during July, putting the final 2019 crop tally at 2,551 million lbs. We can now officially peg the carry-over into the 2020 crop season at 446.1 million lbs. This is up significantly (127 million lbs) from the extremely lean carry-in to the season of 318.3 million lbs.

It’s this increase in carry-over and the large expected crop (still anticipated at 3000 million lbs) that has weighed on prices over the past several months. California sellers have been motivated to sell, and sell they have. Today report shows commitments for both old crop and new crop in very good shape.

Old crop commitments are 100 million lbs ahead of last year (264 million versus 164 million lbs). This means that while the carry-over may be up by 127 million lbs, 100 million lbs of this is already sold, putting uncommitted inventory only up 27 million lbs at 182 million lbs.

New crop commitments are almost DOUBLE what they were a year ago (696 million lbs versus 352 million lbs). California sold heavily in June (172 million lbs) and July (238 million lbs) to get here. New crop commitments are at comfortable 23.7% of the anticipated 3 billion lbs (less 2% for loss).

Buyers will retort that the percentage sold comparisons are not the correct focus and that total unsold lbs more accurately describe market anxiety. This would be fair, but despite the big jump in the expected crop California finds itself only a little over 100 million lbs more unsold than a year ago. The question now shifts to whether buyers have committed earlier than usual and will take an unhurried approach during remainder of the season. As usual the truth is somewhere in between. From our perspective we have seen strong early buying from ingredient customers, but much of this is for growth in new products that were not on the shelves two or three seasons ago.

Prices over the past month have drifted lower as the market has grappled with what the next season will bring. Good demand has met willing sellers and most items find themselves at about the same level as a month ago or a little lower. Standard 5 pricing is seen in the $1.70 to $1.75 per lb FAS range. Most sellers would prefer to sell SSR grades, with good supply keeping differentials over standards limited. Prices jump higher for large size NPX, where offers for new crop 23/25 AOL are few and far between as sellers wait to see actual sizes before committing. NPX 23/25 was most recently seen in the $2.10 to $2.15 FAS California range. Expectations for a large nonpareil crop (1.30 billion lbs versus 1.05 billion last year) have kept small NP and inshell pricing subdued. Amidst good demand, new crop inshell was selling at $1.37 to $1.40 FAS for early shipments, a meat equivalent of less than $2.00 per lb.

California sellers will take comfort in this report. Not much more could have been expected from July shipments. The season totals are impressive and the carry-out, while larger than a year ago, is back to a healthy level that enables continuity of supply into the new season. There is no doubt that attractive pricing is working to encourage sales. While there is some concern that buyers may have come in earlier than usual, strong shipments over the past couple months signal that low prices will translate into strong consumption. Indeed the full effect of low pricing has yet to be felt on the shelf and if California can be patient there is good chance that the market is close, or has already found its floor for the year.

Attention now turns to early harvest results. Hullers have just started in our area and very little to report as yet. Harvest weather has been cooperative. With certainty there is a large crop out there and hopefully the 3 billion lb forecast has given better guidance than a year ago. So far sellers appear to have taken appropriate notice and once again California is on track to sell and ship what it grows.

Jonathan Meyer

Treehouse California Almonds, LLC.

(559) 757-5020