Inshell prices react to well-supplied market

May 18, 2022

NPIS prices fell the week ending Tuesday in the global container market as importers in India braced for a raft of new supply.

“When I look at my business alone, I have 50 containers arriving in India in the next 10 days,” said a U.S.-based inshell buyer on Monday. “India is getting a lot of supply, for sure.”

NPIS fell 5 cents on the week to $1.94/lb FAS. INIS gained a penny, narrowing the NPIS premium to INIS to 22 cents/lb. Other assessed items showed incremental gains or losses.

Despite the NPIS price drop, sellers of the item are still fetching 29-cent premiums to NPX 27/30 kernels at current price levels. The NPISEM premium to NPX 27/30 has been as high as 47 cents this crop year.

Due to shipping delays this year, containers are arriving in India in waves instead of a steady flow. Shipments to India from the start of the calendar year are up 7% compared with the same time last year. A heatwave in the country is also wilting local demand.

Still, any oversupply in India should be quickly consumed. India is California’s largest export market, with the upcoming Diwali celebrations later this year spurring recent demand from the country. More demand will follow.

“India doesn’t just stop,” a California packer said on Monday. “It’s a big market. I think India just needs to continue to buy.”

Benchmark STD5 prices moved higher with trades reported late in the assessment period at $1.78-$1.79/lb FAS for prompt shipment. Stratamarkets assessed STD5 this week at $1.79/lb FAS, up 2 cents on the week.

The increase in STD5 and SSR-grade prices is surprising given that most participants expect those items to make up the bulk of California’s carry-out, which is anticipated to surpass 900 million lbs. Sellers could be sticking to higher offer levels, bolstered by last week’s position report, which showed strong April shipments of 245 million lbs.

European demand

Market participants who attended the INC Nut and Dried Fruit Congress in Dubai last week said key discussion points were shipping constraints and future almond demand.

A weakening euro against the dollar, increases in container freight rates, and a possible recession in Europe were combining to cast a shadow over future European demand for almonds, market participants said.

“In Europe, you’ve got the strong dollar, the increase in freight rates, concern about household spending linked to inflation and fuel prices, and on the consumption side, it’s a little nervous,” said a U.K. trader. “People don’t talk about this, but we’re seeing a lot of requests to delay shipments, and to push stuff back.”

He added that California to Northern Europe container freight rates increased to 8-9 cents/lb and that “anything that you’ve got sold now was sold before the shipping rates went up so returns are much less than anticipated.”

A German marzipan producer said retail price increases typically lagged and would likely hit end consumers in six months.

“We have inflation, but the main problem right now is the strong U.S. dollar,” he said. “We’re paying 10% more because of that.”

Chinese NPX interest

Buyers in China have shifted their focus from NPX 23/25 to NPX 25/27 and smaller-sized kernels, but were encountering difficulties securing them, a market participant said, adding that offers from Australia to China are limited to 20/22-sized kernels.

As a result, Chinese buyers may have to pay up for California origin despite the current retaliatory tariff waiver rate of 35%, albeit with a possibility of a reduction to 25%, a market source said.

“Where are [Chinese buyers] going to buy (NPX) 25/27?” the source said. “Not from Australia.”

A U.S.-based broker said Chinese demand remains light due to COVID lockdowns that are spreading outward from Shanghai. Inshell offers from Australia are also sparse due to damage to its inshell crop from weather during harvest.

Offers for NPX 27/30 for delivery to China were reported between $2.54-$2.58/lb CIF Qingdao.

New crop trade

Trade for 2022 crop focused on inshell with NPIS transactions done from $1.70-$1.75/lb FAS and from $1.80-$1.85 CIF India, all for September and October shipment. Stratamarkets assessed new crop NPIS at $1.72/lb FAS, a 22-cent discount to current crop.

Concerns about a lack of storage space as California prepares to make room for a carry-in plus a new crop was motivating some packers to sell new crop inshell despite the discount, said a Stanislaus County packer.

“Some of the big guys don’t have room, and they’re just going to blow and go straight out of the huller,” he said.

The new crop STD5 price differential to current crop flattened to parity from a 5-cent premium last week. Market participants reported 13 new crop trades, up from 8 the prior week. Five of those trades were for NPIS.

The Stratamarkets Almond Index finished at $2.22/lb FAS, unchanged from the prior week but up 5.7% from the year-ago week.

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