Treehouse Almond Market Update – September 9th, 2022

For the first month of the official 2022 crop season, California handlers surprised by shipping 228.3 million lbs in August.   This is 10.1% higher than shipments of 207.4 million lbs in August a year ago.

With domestic shipments slightly off (-1.6%) at 65.5 million lbs, export shipments were strong at 162.9 million lbs (up 22 million lbs or 15.7%).   While we might point at spill-over shipments from Oakland port trucker strike in July helping the August number, this does not take away from the fact that major destinations, with the notable exception of India, pulled strongly.   Some call-outs:

• Spain: Up 6.2 million lbs to 23.4 million lbs
• China: Up 2.3 million lbs to 9.3 million lbs
• UAE: Up 7.9 million lbs to 13.4 million lbs
• Turkey: Up 5.2 million lbs to 7.1 million lbs
• Morocco: Up 6.1 million lbs to 7.2 million lbs
• India: DOWN 14.3 million lbs to 22.3 million lbs

Low Indian shipments reflect subdued interest in early new crop inshell shipments this season as the early Diwali makes it tough to supply out of new crop.   Last year rising prices and a later Diwali resulted in a big push for August shipments.   As usual, the low Indian August number is a bullish development for the local market and portends well for inshell pricing over the next few weeks.

Last month (July) we saw slow sales in both old crop (63 million lbs) and new crop (62 million lbs).   In August the old crop commitments (which stood at 348 million lbs at the end of July) get rolled into new crop commitments.   The new August sales number, which is calculated at 196 million lbs, is now a combination of old crop and new crop sales and there is no way to untangle them.   New sales at 196 million lbs is a decent number for August (see table below) and will come as a relief to California sellers that still have significant tonnage to commit.

The appropriate figure to compare the sold position of the industry will be sales as a percentage of TOTAL SUPPLY as this will account for the heavy carry-in, which had a higher than usual unsold portion.   The following table shows the end August sold position versus the past several years.  Noting again here that the total supply contemplates a 2600 million lbs 2022 crop.  Forecast numbers are in RED.

The takeaway here is that while at the low end of the range, this is not far off from sold positions seen in 4 of the past 6 seasons.

Receipts of new crop at the end of August of 264.2 million lbs, are down from last August of 311.5 million lbs.   This in and of itself does not inform much other than it is slightly later than last year.    Crop expectation is gain increasing importance as early results cast increasing doubt.   So far, with nonpareil all in and pollinators arriving at hullers we would give general guidance that turnouts are lower than usual and per acre yields are off from last year, with the freeze impacted north more pronounced.   We are hearing yields impacted by as much as 40% in the north, 15% in the central region, while in our southern region we are more informed and can report yields even to slightly off so far in mature nonpareil blocks.

Market expectations for a 2.8 to 2.9 billion lbs crop seem to have already moderated back to the 2.6 billion lb Objective number.   The question now is whether the Objective call for per acre yields at 14% less than last season (1898 lbs per acre versus 2214 lbs per acre) sufficiently contemplate the impact of a difficult growing season.   Record heat in September being just another in a long line of challenges this season.

Prices over the past month have reflected the evolving expectations.   After a disappointing July position report both new and old crop levels shed 5 to 10 cents per lb as an initial reaction, but lack of seller follow steadied the market and today we see standards about 5 cents up from the initial drop, with current crop most recently seen in the $1.65 to $1.70 range and old crop discounted about 10 cents lower.   In an active inshell market in late August brisk business was done with nonpareil inshell in the $1.60 to $1.65 range.   Offers on NPIS are now 5 to 10 cents per lb higher and the market was noticeably quiet in the run-up to today’s report.

Now that the numbers are in, we might expect sellers to wax a little more confident.   Certainly, there is still a long row to hoe with a mostly unsold carry-over that will continue to put strain on cash flow and warehouse space.   A glimmer of hope, however, is what California was looking for and new sales and reduced crop expectations provide just that.   While we do not expect much of a bounce out of today’s report, we can expect that sellers will be unwilling to continue to drop offer levels.   Maybe early to call, but It feels like a floor.   We caution, however, that with domestic consumption continuing flat to slightly lower, California will be relying heavily on key export markets while the dollar rises to 20-year highs.   A healthy Indian market is going to be critical over the next months.

Position Report – August 2022