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New position report paints an increasingly bearish picture for sellers

February 16, 2022

The latest industry position will increase pressure on sellers and shows California heading toward a carry-out that could exceed 900 million lbs, multiple market participants said – a level never tested before.

The January 2022 position report disheartened sellers, who were hoping for better news after a string of bearish reports. The Almond Board of California (ABC) released the report on Friday.

The report affirmed a slowdown in monthly shipments. Reported crop receipts revealed California tracking toward a roughly 2.9 billion lb crop, dashing hopes that it might fall short. New monthly sales were lower than what most market participants expected.

“You’re grasping for any good news right now,” said a Tulare County packer on Monday.

California shipped 177 million lbs in January, down 9% from the year-ago month. Year-to-date (YTD) shipments are down 16% compared with the prior period.

January marks the fifth consecutive month that shipments have fallen short of year-ago monthly shipments.

Before the report, some market participants expressed hope that crop receipts would show California tracking to the USDA’s 2.8 billion lb forecast, which could have provided price support given that most market participants are trading on an expectation of a 2.9 billion lb crop.

Instead, receipts as measured by both the USDA and ABC have already surpassed the 2.8 billion lb mark, with several months left to report.

“It’s going to be 2.9 or 2.95,” said a Stanislaus County packer. “50 million lbs doesn’t really matter at this point.”

Perhaps more surprising for many market participants, the report showed new monthly sales at 208 million lbs, a sliver over new sales last January. Many market participants were anticipating higher new sales: January felt like an active month to most participants – even more active than December, when new sales reached a record high.

“I thought the new sales number was going to be better than that,” said a Northern California packer on Monday. “We were extremely active in January. It turns out we were more active than the rest of the industry.”

Prices in the global almond market fell quickly after the release of the report. The Stratamarkets Almond Index (SAI) lost 9 cents/lb during the week ending Tuesday, finishing at $2.01/lb FAS. 

Still, some sellers found reason for optimism in two data points from the report.

Domestic shipments climbed to 67 million lbs, up 14% from last January. And exports to China increased 76% in the same period. 

Though January exports to China were small, at 3 million lbs, the month year-on-year increase could indicate that traders see current almond price levels as a bargain and are beginning to buy for China, market participants said. China was once California’s largest export market.

“If China comes in, that could change things,” said the Stanislaus County packer referred to earlier.

The position report shows California’s uncommitted inventories at 1.3 billion lbs, 293 million lbs higher compared with last January.

Though uncommitted inventories fell from December to January, the uncommitted inventory delta between current month and the year-ago month increased from a 282 million lb delta in December to a 294 million lb delta in January.

Current uncommitted inventory levels leave California’s sold position at 60% on a 2.9 billion lb crop plus carry-in, down from a 69% sold position last January.

“The clear fact remains that the industry as a whole has a lot of inventory to sell to achieve a comfortable surplus through the late summer transition,” a packer wrote in a market report following the release of the position report. “This is going to continue to add downward pressure to prices.”

Sellers in California are bracing for a second consecutive record carry-out. California carried out 608 million lbs from the last crop.