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Almond Prices Increase Ahead of New Crop Forecast and Position Report

July 6, 2020

Prices rose in the California almond market for the week ending July 3 as growers showed a reluctance to transact ahead of the release of a new crop forecast this week.

Prices for prompt shipment Standards climbed to $1.79/lb FAS Oakland, up 3 cents/lb from prices the previous week.

Trades for the item were confirmed at $1.78 and $1.80/lb FAS Oakland during the week, with confirmed buying interest at the end of the week at $1.77/lb FAS Oakland.

Some market participants pegged the market for prompt shipment Standards higher, pointing to sales to Europe on a delivered basis which netted to an FAS Oakland price of about $1.85/lb.

Buying interest for prompt shipment Standards was also heard throughout the week at $1.81/lb FAS Oakland but could not be confirmed at those levels.

“It’s firming up a little bit, mostly because there are very few sellers,” said one trader. “They don’t like the prices and they’re pulling back.”

Last week marked the second consecutive week that prices have increased for prompt shipment Standards. The chart below shows prices for the previous eight weeks:

Growers hopeful new crop estimate will bolster prices

Market participants said many growers were reluctant to sell last week because they believe the 2020 California Almond Objective Measurement Report – scheduled to be released on Tuesday at noon PDT by the U.S. Department of Agriculture (USDA) – could show a lower crop estimate than recent forecasts have predicted. That could cause prices to climb.

The lack of selling interest on the part of growers has been felt primarily in the forward market for fall 2020 shipment and beyond.

Buyers are eager to purchase forward to lock in as much supply as they can at what are now historically low prices. However, with growers reluctant to sell in the forward market at current price levels, some buyers have chosen instead to transact for prompt shipment, which is causing prices to climb in that market.

One broker in Europe with clients in Spain said some large buyers in that country were seeking to purchase prompt shipment Standards last week to gain market exposure.

“Some of them wanted to take a position, not because they need almonds right now, but just in case the estimate is going to be lower,” the broker said, referring to the objective measurement report. 

Market anticipating new estimate

In recent weeks, the global almond market has been flush with talk about the new crop estimate and how participants will react to the estimate after it is released.  

The objective measurement report has long been accepted as the benchmark forecast. Yet market participants have said it could be viewed with some skepticism this year for missing the mark in previous years, including last year.

“We’re going into this crop with a lot of different views on estimates and less credibility attached to the objective than ever before,” said a sales executive at an almond growing company, referring to the report. “My feeling is there are number of packers waiting for the objective because they think it will help them. But at the end of the day, when this crop comes roaring in, they are going to have to get sales going.”

Even though some market participants might be questioning the robustness of the models driving the objective measurement report, one trader said the report is nonetheless garnering more attention than ever before from the market.

“This is the first time in a long time that everyone wants to see the objective,” the trader said. “It’s the first time where your risk is probably weighted based on the outcome, with 20% downside and 20% upside.”

China showing renewed buying interest

In other varieties, prices for large kernel Nonpareil almonds for prompt delivery remained largely flat on the week even amid a supply constraint and buying interest from China.

The market for Nonpareil, 23/25, Extra almonds for prompt shipment was pegged at $2.14/lb FAS Oakland. Nonpareil, 23/25, Extra almonds for August and September shipment traded at $2.17/lb CFR, but the destination could not be determined.

A trade for Nonpareil, 23/25, Supreme almonds for new crop shipment was confirmed at $2.12/lb FAS Oakland. Nonpareil Inshell prices strengthened, with a trade confirmed at $1.48 FAS Oakland for prompt shipment.

Buyers in China, who are said to be well-supplied from previous purchases from California and more recent purchases from Australia, have nonetheless shown increasing interest in recent weeks in Nonpareil almonds for delivery in the new crop period, market participants said.  

Selling interest appeared to be steady last week for Carmel almonds – with large-size Carmel making up a significant portion of current inventory in California.

Offers for Carmels last week were confirmed at $2.12/lb FAS Oakland for 20/22, Supreme; $2.00/lb FAS Oakland for 23/25, Supreme; $1.91/lb FAS Oakland for 25/27, Supreme; and $1.90/lb FAS Oakland for 27/30, Supreme. Those offers were for new crop and/or current crop shipment, although the packer behind the offers said he might raise prices for buyers seeking prompt shipment for large kernels given the supply constraint.  

In addition to the release on Tuesday of the 2020 California Objective Measurement Report, the Almond Board of California (ABC) is scheduled to release its June 2020 position report on Friday.

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