Almond market eyes possibility of shifting demand patterns

With global almond prices softening recently, explanations of factors driving the decline have focused on supply and California’s deeper unsold position relative to previous years.

However, amid logistical bottlenecks stretching freight delivery timelines, recent analysis of the demand side has highlighted potential shifts in purchasing outside seasonal patterns that could indicate support for prices in the near term.

In a recent market update, Stanislaus County-based packer Select Harvest U.S.A. said the global almond market could be experiencing a shift in global buying patterns.

The packer pointed to an unusual spike in California almond shipments in March 2021 when the state shipped 266.7 million lbs, up 28% from March 2020. It noted the curious similarity between this buying peak and the seasonal peak that usually occurs in October if shipments from January 2020 onwards were hypothetically shifted five-months back.

“What we find is a trend line that is remarkably consistent with historical shipment trends following a generalized taper from a peak in what was historically October to July,” the packer wrote in its market update.

The packer suggested that January, now represented as historically August under the five-month shift scenario, could lead the market into a subsequent three-month period of elevated purchasing. It said that if such a scenario were to materialize, it would render the undersold position of the current market as “misleading.”

Sources in Europe have confirmed that major buyers in the continent will need to replenish stocks that were filled by accelerated buying at the end of the previous crop year but drawn down over Christmas.

However, one Europe-based trader said that while the five-month shift hypothesis makes sense, the market still looks oversupplied, which could continue to dampen demand.

“The issue is we still have so many almonds to sell,” the trader said.

Earlier Diwali buying?

Market participants are also looking at a potential shift in demand from India this crop year that could bolster current crop inshell prices.

Last year, Diwali demand helped strengthen inshell prices for both current crop and new crop. In 2021, Diwali fell on November 4. This year Diwali falls on October 24.

In the lead-up to Diwali last year – from February 16, 2021, to July 27, 2021 – NPIS prices climbed 58%, from $1.52/lb FAS to $2.40/lb FAS, according to Stratamarkets data.

While this year’s Diwali date is only 11-days earlier than last year, it’s unlikely that California packers will be able to ship new crop inshell in time to arrive in India and work its way through the local supply chain to meet Diwali demand.

Buyers in India will require material on the shelf by the beginning of October to meet Diwali demand. This means shipments will need to arrive by the third week of September at the latest.

With current U.S. West Coast to India voyages taking 60 days or longer, booking loads for August shipment is risky if the goal is to meet Diwali demand, a broker in India said. As a result, Diwali demand will likely need to be satisfied by current crop inshell supply.

“If you look at last crop year’s figures and what India has bought in August and September depending on when Diwali falls, I would say India might buy earlier shipments more enthusiastically,” the broker said. “But if it buys huge quantities of June and July shipments to cover for Diwali then probably their August and September new crop year shipments will go down drastically.”

On Tuesday, Stratamarkets assessed NPIS at $1.62/lb FAS, 9 cents/lb lower compared with the year-ago week.

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Launched in 2021, Stratamarkets is the leading provider of independent price benchmarks and market intelligence for the global almond market. Companies in 11 countries and five continents rely on Stratamarkets to track prices in a fast-moving market, negotiate and settle contracts, benchmark performance and much more.

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