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New Position Report Settles Crop Size Debate – Almost

January 13, 2021

Market observers have been debating the size of California’s 2020-2021 almond crop for months, with most siding with the 3-billion-pound forecast from the U.S. Department of Agriculture (USDA) and others proposing alternative predictions based on their own data crunching.

With the release on Tuesday of the latest position report, evidence grew that observers siding with the USDA might be right. The report put crop receipts from August to December 2020 at 2.896 billion pounds, showing California closing in on the USDA forecast.

“When you look at these receipts, it’s hard to see how that won’t happen,” said a packer on Tuesday after the release of the December 2020 position report from the Almond Board of California (ABC). “The crop is 3 billion pounds, and it’s probably going to be bigger.”

The report’s impact on prices was too soon to determine. An hour after the report’s release, sellers raised offers for benchmark STDS by 2 cents/lb to $2.02/lb FAS for prompt shipment. However, no trades were verified at that level. One packer said he expects prices to hold at current levels until bloom in February.

“This position report still matters, but the talk is going to turn to how the bloom will perform,” he said.

Certainly, sellers saw plenty of reasons in the latest report for prices to climb. Among them:

  • In December, total monthly shipments hit 257 million pounds, a record for December and beating the previous December high in 2019 by 51 million pounds.  
  • California’s sold position climbed to 65%, putting it ahead of last year’s 59% sold position.
  • Exports to China reached nearly 20 million pounds, about 8 times the quantity California shipped to China in December 2019.

A trader in California summed up his reading of the report:

“These are powerful demand figures, and nothing to mess with,” he said.

India imported more California almonds than any country in December, receiving nearly 40 million pounds, followed by Spain, China, Germany, and the Netherlands.

India has emerged as a critical export market for California. However, some market observers said the large quantity of almonds exported to India in December could indicate tough times ahead for sellers in California.

They note that demand in India is weakening, underscored by falling prices in India’s wholesale market. And importers in India could conclude from the latest export numbers that inventories in India are full, which could reduce demand.

Sellers will surely be encouraged by the increase in exports to China, which many believe will emerge in the coming years as a dominant export market for California almonds.

Buyers in China have succeeded in reducing taxes they’re required to pay on California almond imports, which is creating newfound demand. As a trade dispute simmers between China and Australia – which has emerged as a significant almond supplier to China in recent years – China buyers are increasingly turning to California for supply.  

Exports increased to nearly every region in December 2020. One exception was the Middle East, where exports fell 25% from December 2019 to December 2020 to 19.2 million pounds.

Crop size debate could linger

USDA crop receipts published in the new position report show that California packers have received 97% of the 3-billion-pound forecast, which tracks with previous years. The chart below shows total crop size, crop receipts from August to December, and the percent of the total crop received by December for the previous five years. The 2020 total crop size is forecast; prior years are actual:

Even though California appears to be on target to meet or exceed the forecast, there’s still fuel for the debate to continue. One market participant noted that the USDA has mistakenly reported crop receipt numbers in previous months this crop year by about 300 million pounds. The USDA has since corrected its miscount, but those errors raise questions about the latest receipt count’s veracity.  

Maybe next month’s report will settle it.

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