September 2018 Almond Market Update

At 168.9 million lbs, September shipments don’t compare well against last September when an earlier crop and strong Chinese and Turkish shipments resulted in 190.6 million lbs going out. For the most part this was anticipated.

There are a few bright spots. Indian shipments were 11% higher at 33.7 million lbs. Western European picked it up from a slow August and were 8% higher at 33.7 million lbs. Domestic shipments were about even.

For the most part, however, lower shipments are reflecting buyer caution in a hand-to-mouth market grappling with tariff uncertainties. Chinese and Vietnam shipments combined were down 39% at 20.4 million lbs. Middle East shipments at 10.8 million lbs were less than half of September last year, with Turkey shipment dropping by 78% to 2.0 million lbs. Notwithstanding, lower shipments were anticipated to these destinations and to still see significant tonnage reported here is encouraging.

Commitments at the end of September were reported at 557 million lbs, 22% behind commitments of 722 million lbs at the same time last year. To us the market seemed quite active in the last week of September, with good demand coming from various directions, including Chinese inshell buying. Commitment numbers, however, suggest that much of the activity did not make into September sales which are calculated out at 211 million lbs, a little down from August and from September a year ago (235 million lbs) and will spill into October numbers.

On the crop front we continue to see and hear mostly sobering news from growers. Nonpareils are yields are definitely lower and looks like pollinators will struggle to make up the difference. We are almost finished in the orchards as weather turns cool in California. Another week or two at most and everything will be in huller stockpiles. Handlers at this stage have a much improved idea of what they have to sell. Talk around the state, and for our part, is that the crop is not living up to earlier expectations.

Crop receipts (deliveries from hullers to handlers, not to be confused with deliveries from growers to hullers) grew by 643 million lbs in September. The end September total is reported now at 833 million lbs, slightly down from receipts of 844 million lbs at the same time a year ago. All we can say at this stage is that hullers are hard at work and almonds are available for shipment. It will take at least another couple of months before crop receipts will tell us anything about the total crop size.

Prices since last report appear, at least for now to have found a floor. We saw standards dip below $2.30 per lb in the third week of September, apparently finding both willing buyers and sellers. Buyer confidence improved as pricing firmed with standards this week seen closer to $2.40 per lb. Nonpareil inshell prices sunk to about $2.02 per lb at the same time, coaxing Chinese buying which then moved inshell prices closer to $2.15 per lb by early this week. Indian buying was noticeably absent, but apparently it was an inauspicious buying period and we anticipate Indian demand to reemerge over the next week. Manufactured pricing has been steady with blanched sliced and slivered selling consistently near $3.30 per lb.

In summary there is not much in this report for bulls to get excited about. While the crop remains a valid worry, another month of shipping and commitment numbers reinforce demand concerns. The late (perhaps 2 weeks later than last year) crop provides a partial excuse for tepid September numbers. October shipments will provide a more accurate picture. Last October, however, shipments of 247 million lbs present a high hurdle which is unlikely to be approached if Chinese shipments continue at 60% strength and the Middle East continues to struggle. This concern continues into November and December which enjoyed especially strong shipments last year. At this stage the case for higher pricing will have to rest on the 2018 crop coming in lower than expected. This will not be clear till December or perhaps even January.

Jonathan Meyer
CEO
Treehouse California Almonds, LLC.