One of the first forecasts of California’s 2021 almond crop was smaller than many market observers expected.
The widely anticipated estimate from U.S.-based Terra Nova Trading and U.K.-based GLM Trading, released on April 14, puts California’s 2021 crop at 2.8 billion pounds – 300 million pounds lower than the 3.1-billion-pound current crop.
Packers in California increased their offers following the release of the forecast. All 17 items assessed by Stratamarkets showed gains on the week.
“In January, people had really been thinking 2.9 to 3 billion pounds,” said a U.K.-based trader from a rival firm. “2.8 is on the lower end of what they could have said.”
A packer in California echoed that view:
“It was a good number for the industry,” said the packer, adding that the forecast was more bullish than he expected. “I’m excited to see that.”
However, another U.K.-based trader said the forecast is unlikely to provide price support beyond the immediate period.
“This gives California an excuse and confidence to raise prices,” he said. “But fundamentally, it doesn’t change anything.”
TNT and GLM Trading buy and sell almonds and are impacted financially by market prices. They have earned a reputation over the years for producing accurate forecasts, and their estimates are widely discussed.
“I think the work they do for the forecast is quite substantial,” said the U.K.-based trader referred to earlier.
The chart below shows the TNT/GLM forecast versus actual crop sizes from 2010 to 2020:
The TNT/GLM forecast precedes two forecasts from the U.S. Department of Agriculture’s (USDA) National Agricultural Statistics Service (NASS), scheduled for release in May and July. The NASS July estimate, referred to as the objective forecast, is considered the most thorough of the two NASS forecasts.
The TNT/GLM forecasts missed the actual crop size by an average of 97-million pounds annually during the 2010 to 2020 period. The NASS Objective forecast missed the actual crop size by an average of 137-million pounds annually.
The chart below shows the deltas, in absolute values, between the two forecasts and the actual crop sizes from 2010 to 2020:
To conduct the forecast, three members of the firms visited 365 almond orchards during a seven-day period in early April, according to a five-page summary of the findings. The report puts the 2021 crop yield estimate at 2,190 pounds per acre and 2021 bearing acres at 1.28 million.
Other conclusions from the report:
- The Nonpareil crop “does not look as heavy as last year and we saw many orchards with bud failure…”
- The Northern California growing region “is clearly taking a break this year after producing a ‘monster’ crop in 2020.”
- The Southern California growing region is “the best area of the state with some inconsistent yet decent crops.”
JJ Magdaleno, a partner at TNT who helped conduct the forecast, said one of his takeaways from the estimate is that there may be room for a small price uptick.
“From the handlers in California, I think it’s an exhale of relief because I think a lot of them thought if you have three billion pounds again, it’s just going to be an uphill battle all year,” Magdaleno said.
But even if the TNT/GLM forecasts hits the mark, a large carry-out this crop year could still mean California packers will have a significant quantity of almonds to sell for the foreseeable future.