March 2017 Almond Market Update

California handlers shipped 152.3 million lbs of almonds in February, down slightly (1.8%) from shipments of 155.1 million lbs in February a year ago. Domestic shipments at 51.8 million lbs were about even compared to a year ago. Noteworthy major export markets were a mixed bag. Robust Indian shipments (10.0 million lbs, up 130%) were balanced by weak China /Vietnam shipments (6.2 million lbs, down 50%). Shipments to South Korea (up 22%) and Japan (up 16%) were strong while Western Europe (down 9%) and Middle East (down 23%) lagged last February tallies.

Season to date shipments at 1268.9 million lbs (August – February) are now up 28% versus last season.

Commitments at 482 million lbs slipped only slightly from last month (491 million) and suggest very respectable new sales of 144 million lbs in February. Uncommitted inventory (including the carryover) at 744 million lbs is appreciably lower than uncommitted inventory of 810 million lbs at this time last year.

The new sales tally is even more impressive when considering the market environment over the past month which has had to deal with a mostly cold and wet bloom which motivated many sellers to the sidelines. Then, in typical seesaw fashion, warmer and sunny conditions over the past 10 days have likewise demotivated buyers.

Pricing over the past month has reflected weather related dynamic. Following the storm system that moved over the entire growing region in mid-February price jumped by about 10 to 15 cents per lb. Standards firmed from around $2.35 to $2.45, while harder to find nonpareils tightened by about 15 cents. Over the past week or so we have seen pollinator levels retracing most of the gains (standards now seen in the $2.35 to $2.40 range) while nonpareils have hung a little tougher. Nonpareil Extra 23/25 bids are currently seen from $3.25 to $3.30 per lb. Blanched sliced and slivered are most recently trading near $3.25 per lb for 27/30 input.

Everyone is asking what the effect of weather will be on the 2017 crop. In short, nobody yet knows. We hear a range of “market talk”. Some traders tell us the market is expecting a range of 2.1 to 2.2 billion, others push this to 2.2 to 2.3 billion, while we hear the occasional 2.0 to 2.1 billion range as an opinion on the “market expectation”. We will add our own opinion that the crop has lost potential, particularly for the nonpareil and associated pollinators. While there is a good chance that the crop will surpass the 2125 million lb level of current crop receipts, it will likely not be with a margin wide enough to put pressure on prices.

Shipments for the 2016 season are on track to total close to 2100 million lbs. California will enter the 2017 crop with a very manageable, even necessary, carry-out of close to 400 million lbs. The 2017 crop will need to be every bit of 2150 million to 2200 million lbs to keep demand supplied at these price levels. We expect the momentum in demand and shipments to continue. Already March looks to be a busy month for handlers, while at the same time most markets still need to cover much of their summer needs. It’s worth repeating… a good 2017 crop is needed. At this point there is a real risk that this does not materialize, with the associated risk of a firming market.

Upcoming dates to keep in mind. April 11th, March Position Report. April 26th, Acreage Report. May 10th, Subjective Estimate.

Best regards

Jonathan Meyer

Treehouse California Almonds, LLC