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Prices fall as selling interest firms

May 25, 2022

Nonpareil kernel prices fell in the global container market the week ending Tuesday despite talk of those items thinning.

NPX 30/32 led the decline, losing 14 cents on the week. NPX 23/25 fell 9 cents.

The NPX 30/32 premium to STD5 has been unusually high in recent weeks, climbing to 54 cents last week. The item’s price decline brings its premium to STD5 closer to normal levels.

Carmel Type kernel prices fared better as prices for most assessed items fell. CTS 23/25 and CTS 27/30 gained 5 cents on the week. However, other pollinizer prices declined as market participants expressed doubt about demand from Europe, a key export market for sized pollinizers and STD5.

Some packers noted decent STD5 demand from Europe and expressed optimism that buyers there would help drive new sales and shipments from now to July, helping sweep up California’s remaining inventory. However, the anticipation of an impending recession in Europe, a weaker-than-usual euro versus the dollar, and shipping logjams could negatively affect almond demand from the region, participants said.

“Usually, at this point, we have a lot of Q4 demand that comes in,” a California-based trader said, referring to demand from Europe. “The only demand we seem to be getting is for Q1 forward. Something is not right.”

On Thursday, STD5 traded at $1.73/lb FAS for June-July shipment. Some European buyers expressed surprise at the level, given that STD5 has generally traded in a tight $1.75-

$1.79/lb range for several weeks, with the lower end perceived as a floor at which buying support rallies.

That’s probably as low as it will get, but we’ll see,” said a U.K.-based trader. “It’s interesting that when the price of STD5 was over $4/lb, we’d never consider 2 cents as a movement, but these days it seems to make such a difference.”

Stratamarkets assessed STD5 at $1.77/lb on Tuesday, down 2 cents on the week.

European market participants said the long-term demand picture for the continent looked somber for sellers, with delayed containers now arriving and boosting inventories. 

As a result, many buyers are securing shipments on a hand-to-mouth basis and seeking to close business at 1-2 cents below offers.

A source at a Spanish processor said his company was off the market for the foreseeable future due to ample stocks and large volumes of incoming shipments from California.

“Spain bought 50 million lbs in April, and we will receive that amount of containers in May and June,” he said.

European processors and manufacturers that sell into the ingredient market are purchasing their peak season Christmas requirements, as shipping delays have stretched timelines.

“We need time to process the nuts and sell to other industries, which in turn need time to manufacture finished products and get them on shelves in time for Christmas,” a German marzipan manufacturer said.

A recent point of discussion in the market is the state of long-term European almond demand, given the region’s current cost of living. Rising energy, gas, and food prices could translate to lower nut consumption as households tighten food budgets by cutting items seen as non-essential.

Inshell Trade

In the inshell market, INIS trade ramped up on increased selling interest. The INISEM premium to INX 23/25 fell 2 cents to 22 cents as INIS lost 1 cent on the week.

Selling interest from California was even stronger for NPIS, a second California-based trader said, adding that India has more NPIS to buy even though importers there have satisfied much of their demand.

“We expect India to cover more of their NPIS needs in the next week or so,” the trader wrote in an email.

The NPIS premium to INIS increased to 24 cents from 22 cents last week. NPIS gained 1 cent on the week.

An ongoing heatwave in India has sapped local demand, market participants in India said, even though rains began early in South India.

Delayed containers continued to arrive in Nhava Sheva, adding to supply and depressing local prices of NPIS to about $1.85/lb Ex-works and further dampening interest in U.S. current crop FAS offers, which were 10-15 cents higher.

Most shipping lines to India trans-ship via China and Sri Lanka. Ports in both countries are congested. The Sri Lankan port of Colombo, a vital trans-shipment point for containers heading to India, was beset by backlogs after a 23-hour strike by dockworkers earlier this month.

New Crop

Most new crop items traded at discounts to current crop during the assessment week.

NPIS and INIS showed the steepest discounts to current crop at 21 cents and 18 cents, respectively. NPX 27/30 was seen at a 12-cent discount to current crop while new crop STD5 traded at a 6-cent premium to current crop.

Due to delayed containers finally arriving, several European buyers appear to have shifted their attention to Q1 purchases of STD5 but are deterred by current offers.

“Almonds have a two-year shelf life so no one in Europe is interested in paying a 10-cent premium for Q1 new crop,”  said a U.K.-based broker.

One European buyer said he believed current crop was being offered at a discount as packers were aware that soon they would have to free up their warehouse space to make way for new crop.

“They have June and July and maybe half of August, then the new crop will start coming into their barns, so they have to get rid of something,” he said, adding that he expects new crop STD5 premiums to current crop to begin narrowing.

The Stratamarkets Almond Index lost 2 cents on the week, falling to $2.20/lb FAS.

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