Weak demand, low liquidity, and uncertainty ahead of September position report leave almond prices vulnerable

October 13, 2021

Prices for most of the 18 items assessed by Stratamarkets slipped again in the global almond market the week ending Tuesday, save for a few Nonpareil kernel items, as both buyers and sellers largely refrained from taking big positions.

The softening preceded the September 2021 position report, which the Almond Board of California (ABC) released on Tuesday. Many market participants pulled out of the market ahead of the report’s release.

“Unless receipts are way out of whack, the crop is gaining steam … so I’m not sure what guys are waiting for,” said a Northern California packer. “Sometimes you just wait for the report to report what you want. It’s an annoying game, but I think the main thing is buyers are just testing the bottom.”

The latest position report (see the story that begins on Page 2), showed September receipts totaled 756.8 million lbs, down 3% from the year-ago month, though year-to-date receipts came in at 1.1 million lbs, up 1.5% from last year.

Few bids, offers or trades were heard on Tuesday, especially from India, where market participants said local demand has fallen off dramatically.

“Every week we are looking at a 10 percent slide (in prices),” a broker in Delhi said on Tuesday, attributing the decline to high prices due to the run-up of inshell prices this past summer.

The same broker said that because of shipping issues, he doesn’t expect there will be enough supply to meet Diwali demand, but that buyers are “waiting to see the position report because they think if it is in their favor, prices might drop a few cents.”

The broker added that if the position report showed shipments to India above 50 million lbs in September, “the market becomes a disaster.”

The September position report showed inshell shipments to India totaled 53.6 million lbs, down from 63.3 million lbs in September 2020.

From Europe, buyers there reiterated a lack of demand, citing high stockpiles. A Belgium-based buyer said he doesn’t “see any chance for new demand for Q4, so I’m expecting prices to ease a little more because I think demand has faded away, and there will be some selling pressure.”

A UK-based buyer said evidence for the lack of European demand is a drop in trading, noting that because of the current shipping issues, buyers would need to be buying now to guarantee delivery by Christmas. But that isn’t happening, he said.

“It shows many people are covered, so they are prepared to wait,” said the UK-based buyer.

At the close of the assessment period, two unverified trades for STDS were reported at $2.30/lb FAS, with bids from $2.25/lb FAS to $2.28/lb FAS. A STDS trade for October shipment was verified earlier in the assessment period at $2.35/lb FAS.

“I’m not surprised they are working that, but I had one customer call and tell me they needed to find warehouse space,” said a California-based broker, referring to a customer in Germany.

Some market participants said they expect prices for STDS to soften further. A California-based trader said he thinks the STDS market could dip to $2.20/lb FAS, but from January forward, buyers in Europe are “real naked and need product.”

“I can’t see STDS going below $2.20,” said a Kern County packer. “I think they are too valuable. The industrial side, really domestically, is going to help support prices, because where straight pack has single-digit growth, anything processed is really growing.”

The packer was one of several who said this week he has pivoted to the domestic market.

“I’m 100 percent favoring domestic,” agreed the Northern California packer. “The problem is there are only so many buyers, but if you can avoid the ports and the unknowns, it’s worth giving a penny or two to the buyer.”

Holding onto offers in the face of a declining export market may not seem notable but offers continued to dribble out of California this week.

“Selling interest is limited right now but those who are selling are going to buyers with unsolicited offers, which is why (the market) is softening,” said a Central California packer.

This packer said he’s not convinced STDS “will bounce back because there is plenty of small stuff. It might be hard for this market to recover.”

What did gain this week were a few Nonpareil kernel items, notably NPX 27/30, which is likely to be the focus of much demand this year due to the lack of large kernels, said several market participants.

“I think the pendulum is swinging in the low zone, but big Nonpareils are fantastic money,” said the Kern County packer. “I think people will end up with sizes they weren’t expecting, so then the trouble is it gets priced out.”

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