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Almond Prices Fall as Pandemic Saps Global Demand

June 1, 2020

Prices softened in the California almond market during the week ending May 29 as buyers and sellers struggled to agree on price.

Current crop Standards for prompt shipment traded from $1.86 to $1.89/lb FAS Oakland, with $1.86/lb the more repeatable transaction level, market participants said. Prices for current crop Standards fell about 4 cents/lb last week compared with price levels the previous week.

One broker said buyers and sellers remained largely dug into their positions, making it challenging to conclude deals last week.

“It’s been difficult to find the prices [buyers] are asking,” the broker said, adding that many of his clients on the buy side believe prices will continue to drop.

Current crop price premium to new crop is tight

Prices for new crop Standards appeared to hold their ground last week, with trades heard at $1.85/lb FAS Oakland – roughly the same level they traded at last week. This puts the current crop Standards price premium to new crop Standards at about 1 cent/lb.

Market participants said the current crop price premium to new crop prices is equally narrow for other almond varieties.

“There’s really no [price] difference right now between old crop and new crop,” one packer said.

In other varieties, a large packer and trader said he was offering current crop Nonpareil, 23/25, U.S. extra number one almonds at $2.20/lb FAS Oakland but was not finding buying interest at that level. Current crop Nonpareil, 23/25, U.S. extra number one almonds entered last week bid at 2.15/lb and offered at $2.17/lb FAS Oakland.

Prices appeared to be slightly lower last week for new crop Nonpareil, 23/25, U.S. extra number one almonds, which were bid at $2.10/lb and offered at $2.15/lb FAS Oakland. One packer said he heard a trade for the same new crop variety, size, and grade at $2.19/lb FAS Oakland, but that trade could not be confirmed.

In the domestic market, the packer and trader referred to earlier said a large retailer was seeking to buy new crop Nonpareil, 23/25, supreme almonds at $2.05/lb last week.

“We’re just not getting any kind of support from our growers for those prices,” the packer said.

New crop California, 30/32, U.S. select sheller run almonds traded last week at $1.90/lb. However, it was not clear if the trade was FOB or FAS.

Contract defaults cloud Nonpareil in-shell market

Meanwhile, one packer said another large almond producer and packer sold Nonpareil in-shell almonds last week to an importer in China for $1.50/lb. A bid for Nonpareil in-shell almonds was also heard at $1.45/lb.  

Participants said the market for Nonpareil in-shell almonds has been unusually murky in recent weeks due to contract defaults said to be occurring in India – a big buyer of that variety.

“That market is completely out of control,” said one packer, adding that she believes the market for Nonpareil in-shell almonds should be 10 cents/lb higher. “There is no sense in the in-shell market right now.”

Market participants said the defaults are affecting hundreds of shipping containers either in India or on their way to India. Participants said sellers are now attempting to re-sell volumes impacted by the defaults.

A letter circulating in the market last week, carrying the name of a well-known almond distributor and dated May 2020, urged companies to refrain from renegotiating contracts with importers seeking resets.

“We don’t renegotiate contracts because doing so hurts those who are performing,” the letter said.

Market participants described trading activity last week as unusually quiet for this time of year, partly because almond demand remains blunted in key global markets still emerging from covid-19-induced shutdowns.

“It’s a very low-traded market right now for everything,” said the large packer and trader referred to earlier. “The type of volumes that we would be expecting to be doing right now are greatly reduced because there’s still a lot of ports that are closed. They are starting to slowly open up. But the vast majority of the business is still very closed. So, the prices are low, but there is not a lot of trading going on. I think once those trades start to occur, I think we would start to see some firming.”

Almond prices have fallen sharply this year, the result of softer demand due to the global pandemic and expectations of a supply glut. The U.S. Department of Agriculture is forecasting a record 3-billion-pound almond harvest in California this year.

The next look at how the pandemic is impacting global almond demand will come on June 11 when the Almond Board of California is scheduled to release its May 2020 position report.

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