March 2018 Almond Market Update

California handlers shipped 193.9 million lbs of almond in March, up 8.8% versus March shipments of 178.2 million lbs a year ago. Another monthly record and on the upper end of expectations.

Strong March numbers were seen in domestic shipments (up 7.1 million to 63.3 million lbs), Western Europe (up 7.7 million to 56.7 million lbs) and China/Vietnam (up 6.0 million to 17.7 million lbs). Meanwhile, notable shortfalls were seen in Middle East shipments (down 3.5 million to 15.7 million lbs) and India (down 3.1 million to 9.5 million lbs).

Season to date totals, however, better describe the overall picture of strong demand in all major regions; domestic up 6.6%, Asia-Pacific up 17%, Western Europe up 13% and Middle East up 3%. Season-to-date shipments are now running 11.7% ahead of last year and are on track to empty California warehouses down to a barely manageable carry-out of under 350 million lbs at the end of July.

No surprise ending out of 2017 crop receipts, which trickled in a further 6.3 million lbs in March to bring the total to 2256.7 million lbs – remarkably close to pre-season estimates.

After a quiet few weeks of new sales (computed at 112 million lbs), commitments unsurprisingly dropped by 82 million lbs to 442 million lbs and are just about level with commitments at the same time a year ago. Committed and shipped now represents 92.5% of the anticipated 2270 million lbs and anticipates the drawdown of carry-over. It also suggests that shipments over the balance of the season should be solid as approximately 2/3 of the anticipated shipments are already sold.

Last month we updated you on the February freeze, which has shocked the market about 40 cents higher. Over the past weeks, opinions on the crop outlook have generally improved and prices have drifted lower by about 10 to 15 cents. Also weighing on sentiment has been a potential 15% increase in Chinese tariffs, which have kept Chinese buyers sidelined. While trade negotiations are still underway and the final impact on Chinese consumption is expected to be limited, for now it has contributed to a quiet market. Standard 5% for current crop is trading just under $2.70 per lb, Cal SSR for various sizes command a decent premium and are seen between $2.85 and $3.00 per lb. Better grade Nonpareils are in short supply and larger sizes are still selling north of $3.50 per lb. Blanched slice and sliver are seen between $3.55 and $3.70 per lb depending on the input size.

A tight transition to new crop is now widely anticipated and we are seeing about a 10 cent premium versus new crop. Nevertheless, the main driver of prices now becomes new crop expectations. It is tough call this year given the spotty nature of the damage. In general though we see the south better than the north and early varieties will be worse than later varieties. Monterey and Fritz look decent in our area, as do hardshells. Nonpareils look light, but are always a tough call. Crop estimates from trade and NASS over the next month will be closely watched. Shipments this season will end up near 2300 million lbs. Given the minimal carry-out, the industry needs a crop of 2400 million lbs or higher to meet demand.

Kind Regards,

Jonathan Meyer
CEO
Treehouse California Almonds, LLC.