Treehouse Almond Market Update – October 11th, 2022

California handlers shipped 188.4 million lbs of almonds in September, down 17% from shipments of 227.6 million lbs in September a year ago.

September domestic shipments were off 19% at a disappointing 51.7 million lbs.

September export shipments were down 16% at 136.7 million lbs.   Asian markets were responsible for the bulk of the weakness; India off 39% at 33.7 million lbs, China down 20% at 18.4 million, Japan down 38% at 3.9 million lbs, South Korea off 54% at 2.7 million lbs.   European shipments were relatively steady for the region at 37.4 million lbs, while the Middle East was up 11% at 20.7 million lbs for September.

It should be noted the that the lower Indian September number (off 21.2 million lbs at 33.7 million lbs) should be encouraging to the local Indian market.     However, this same point was offered after the low August numbers and Indian buyers did not jump in.   Shipments to India for the first two months of the season at now down 35.5 million lbs (56.0 million lbs versus 91.5 million lbs).   According to one trader the Indian market is “running on fumes” and buying needs to occur to keep almonds in front of consumers.

With September shipments struggling, total shipments of 416.7 million lbs for the first two months of the year are running 4% behind last season.

New sales for September are decent at 240 million lbs (52 million lbs domestic and 138 million lbs export).   Typically, the industry sells between 200 and 300 million lbs in September.   Commitments are still running below levels seen a year ago (665 million lbs versus 720 million lbs).   Given the large carry-in this season (837 million lbs) the most useful measure of the industry’s position is the committed and shipped (1,083 million lbs) as percentage of total supply (3,385 million lbs).    This measure sits at 32% at the end of September, slightly below a year ago at 33%.   We have seen this figure as high as 44% in 2020 and 32% back in 2015.

Crop receipts at the end of September totaled 979 million lbs, 90 million lbs behind last season’s pace when 1068 million lbs were reported.    The slower pace reflects the later start and then also a slow-down in September hulling (714 million lbs versus 757 million lbs last September) attributed to a rain event.   The receipt number at this stage cannot tell us much about the anticipated crop size.   We continue to hear mixed results on yields.   Based on current information there is not enough to support an argument that the final crop will be much different from the Objective forecast and market expectation of 2.6 billion lbs.

After a short-lived attempt to rally a few cents after the encouraging August shipment number a month ago, prices over the past weeks have eroded by 5 to 10 cents per lb depending on the item.   2022 crop standards were most recently seen in the $1.60 to $1.65 range for shipment through February.   Nonpareil pricing has seen similar weakness, with inshell premiums evaporating as Indian and Chinese buyers remain patient.

In short, there have been more motivated sellers than motivated buyers.   With today’s report this situation is not likely to change.   Despite input cost pressures, risk of a dry winter, likelihood of increased orchard removals and potentially another mediocre or lower crop in 2023, the fact remains that there are still significantly more almonds to be sold than usual (over 200 million lbs more than last year going off the uncommitted inventory number).  Buyers are facing their own uncertainties – an expensive US dollar, inflationary pressures on their inputs, lower consumer discretionary income and global political and economic clouds.    The current supply demand imbalance will work itself out, but stronger shipments are needed if this is going to occur in this crop season.   Domestic shipments will be closely watched in in October, as will the Indian buyer response to tightening local supply.

Position Report – September 2022