May 2021 Almond Market Update

California handlers shipped an impressive 249.9 million lbs in April, up 37.9% from shipments of 181.2 million lbs in April a year ago.

Comments and shipment callouts will look very similar to our update made a month ago after the March report, with the same positive trends extending and the same areas of concern continuing to niggle.

The 68.7 million lb increase was entirely due to exports and then some, as April domestic shipments decreased by 7.6 million lbs (-9.8%) to 70.1 million lbs. Domestic shipments have been lackluster since January, likely due to a sharp drop bulk bin retail and foodservice channels — with season-to-date domestic shipments on slightly ahead (+2.0%) of last season.

Superstars of the export market pulled heavily in April. India up 15.1 million to 21.7 million lbs (+221%), China up 8.2 million lbs to 10.0 million lbs (+466%), South Korea up 4.4 million to 9.3 million lbs (+87%). We also continued to see remarkable strength in shipments to Western Europe, up 16.7 million to 69.8 million (+31.4%), while the Middle East had a very good month with shipments increasing by 13.6 million lbs to 22.2 million lbs (+258%). Another very good month of shipment to Morocco does not go unnoticed — up 5.2 million lbs to 6.7 million lbs (+356%).

After taking a breather in January, California has shipped to export markets at a phenomenal pace over the past three months (539 million lbs versus 370 million lbs a year ago). Season-to-date export shipments are now 354 million lbs (+27.8%) ahead of last year’s pace and total 1,626 million lbs.

Total season-to-date shipments now stand at 2,228 million lbs, up 19.6%.

New sales for April are computed at 162.6 million lbs. This is a strong showing (compare to 124.8 million last year) and keeps commitments healthy at 724 million lbs (compare to 499 million lbs a year ago).

Handlers reported another 4.7 million lbs of 2020 crop receipts, bringing the total 3098 million lbs. The final total is going to be a shade over 3100 million lbs, a number the industry has been using for some time now.

Since last month, 2021 crop expectations have enjoyed guidance from several quarters. An early, influential trader forecast put it at 2,800 million lbs on 1,280,000 bearing acres. A week later NASS put bearing acreage at 1,330,000 and Land IQ pinpointed it at 1,323,722 bearing acres. This week a California handler group announced a 2,950 million lbs forecast on 1,300,000 bearing acres. Tomorrow the Subjective Estimate will throw its hat in the ring. The ranges seem reasonable. The crop is developing well but will not reach the bumper yields per acre seen last season. In addition, a dry winter has dramatically increased water costs for some growers, who will turn to deficit irrigation in a low almond price environment.

Prices have been relatively un-swayed by the crop developing fundamentals. Strong March shipments a month ago, encouraged sellers to increase offers by 5 cents per lb. The trader forecast added another 5 cents the following week, which then evaporated after the bearing acreage numbers came in higher than expected. All in all we find ourselves about 5 cents higher than a month ago, with current crop standards most recently trading near $1.85 per lb. Nonpareils have continued to extend their premiums. Difficult to find NPX 25/27 and larger are naming their price, while NPX 27/30 are now seen in the $2.20 to $2.25 range, up 10 to 15 cents per lb versus a month ago. New crop has been consistently offered at a 5 to 10 cent premium to current crop levels.

With another month of strong shipments in the rearview mirror, the anticipated carry-out continues to shrink. Three months ago, a carry-over of 800 million lbs was a reasonable expectation. Today, with good commitments on the books and only three months to go, that number is closer to 650 million lbs, significantly changing the narrative.

With a manageable carry-over the 2021 crop number become increasingly important as the market tries to anticipate pricing that will move the supply. Certainly, low prices have spurred massive shipments to price sensitive markets. However, almonds are also enjoying resilient demand growth in consumer package goods and neatly slot into well entrenched health trends. At low prices California is going to ship close to 2,850 million lbs from the 2020 supply. With a similar total supply (carry-over plus crop) now expected for the 2021 season, what levels are needed to ship another 2,850 million lbs next year? We continue to hold that there is more upside price risk at this juncture. Timing, however, is not as easily answered. Tomorrow’s Subjective will likely set the mood for the next couple months, despite strong shipping numbers.