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Choppy market for STD5 and Inshell ahead of the January position report

February 9, 2022

Prices in the global almond market were bumpy the week ended Tuesday as trade activity increased, with transactions for items such as STD5 and NPIS concluded in a wide range.

The week was also notable for shallower declines in price for Nonpareil items, suggesting those prices could be stabilizing. Nonpareil prices have corrected by roughly a third since their current crop year peaks in mid-September.

In the STD5 market, multiple trades were reported during the week between $1.80/lb-$1.84/lb FAS, though prices trended lower as the week progressed. Several packers said they’re in no hurry to sell STD5, which could be helping to stabilize prices.

Europe, however, is picking up cargoes here and there, testing a floor in the low $1.80s/lb FAS that’s held for the past four weeks. Some are also buying to get ahead of logistics issues.

One European buyer said he sees “no relief” from the current transportation bottlenecks, noting that transit times from Oakland to northern Europe have lengthened to roughly 60 days. As a result, buyers are restocking earlier to keep production lines running.

“If you order something today and you want to be on the safe side, you budget three months,” the European buyer said. “In other words, Europe cannot do anything with new crop in time for Christmas.”

He explained that with new crop shipments of STD5 not starting until the beginning of October, the earliest they could arrive is December – too late for Christmas demand.

“You have to think at least one year ahead, everybody is restocking higher,” he said.

A European trader said the delayed shipment times have boosted the premium for ex-works spot shipments in Europe to around 10 cents over the combined cost of FAS shipments and container freight.

“If the logistics are not resolved, then we’ll most likely see a repeat of last year: stronger demand in the summer,” he added.

Stratamarkets assessed STD5 on Tuesday at $1.81/lb FAS, down 2 cents on the week, and 4 cents lower than the year-ago price.

Inshell prices continued to trade in a wide range, with prompt cargoes of unsized NPIS concluded from $1.60/lb-$1.69/lb FAS during the week. INIS prices clawed back some cents after hitting a near twelve-month low the previous week, with trades reported from $1.41/lb-$1.50/lb FAS during the assessment week.

One Indian trader said the inshell market had been finely balanced between a fall in the Indian Rupee against the U.S. dollar  – reducing buying power – and bullish sentiment over a combination of easing COVID restrictions and a forecast for colder temperatures that could lift local consumption.

Indian buyers also describe current inshell prices as “reasonable,” with several expecting inshell prices to rise in the coming months as the market begins to focus on Diwali demand. Many agree that with the current logistics issues, Diwali demand will have to be met with 2021 crop, given there may not be enough time for 2022 crop to reach India by late October.

“We have to use this crop for Diwali, I have no hope for new crop,” said an Indian importer.

Local Indian demand is said to remain tepid, though one broker said retail prices have started to decline.

Stratamarkets assessed NPIS this week at $1.62/lb FAS, up 1 cent from the prior week, and 4 cents higher than the year-ago week.

Prices for NPIS have also stabilized, remaining in the low $1.60s/lb range for the last four weeks.

INIS traded in a wide range this week, between $1.41/lb-$1.50/lb FAS. Stratamarkets assessed INIS at $1.47/lb FAS, narrowing its discount to NPIS to 15 cents, down from 18 cents last week.

An Indian broker said INIS has been attractive to buyers due to its discount to NPIS, which has averaged 20 cents this crop year. The INIS discount to NPIS averaged 17 cents in 2020-2021.

In the Nonpareil market, the recent push to cash in on large-kernel premiums to small kernels appears to have slowed, with price declines less pronounced this week. The Stratamarkets NPX 20/22 assessment dipped nine cents on the week to $2.70/lb FAS, after declining 19 cents in each of the previous two weeks.

The declines mean spreads have continued to narrow.

The NPX 20/22 premium to NPX 27/30 dipped this week to 51 cents. It averaged 75 cents in the previous crop year. The NPX 20/22 premium to NPX 25/27 also narrowed this week to 32 cents, after averaging 64 cents last year.

Trading is expected to lighten this week in advance of the Almond Board of California’s scheduled release on Friday of the January 2022 position report. While most market participants expect shipments to continue to lag year-ago levels, many are anticipating strong new sales for January.

A U.K.-based trader said the report could show January sales topping 300 million lbs, easing fears of a large carryout at the end of the crop year.

“There’s a scenario here where if California has enough sales in January, that will give them confidence again and no reason to panic,” he said.

Bloom is beginning in some parts of California, and current weather forecasts call for warm, dry weather. The state has had little precipitation since late December.

Market participants reported 145 trades to Stratamarkets during the assessment week, a new weekly high. The Stratamarkets Almond Index ended the week at $2.10/lb FAS, down a sliver from last week and down 1% from the year-ago week.