Nonpareil kernel prices firm as other items show marginal moves

June 1, 2022

Almond prices continued to drift in the global container market the week ending Tuesday on stable fundamentals.

Led by NPX 23/25, most Nonpareil kernel prices firmed while pollinizers largely showed incremental losses. Inshell prices declined, with NPIS assessed 5 cents lower this week at $1.90/lb FAS.

STD5 remained unchanged on the week at $1.77/lb FAS, though bids and offers crossed and reported trade ranges were wide.

“Prices seem to be all over the board,” a California-based trader wrote in a text message on Tuesday.

The recent increase in the pace of shipments from California to Europe was boosting inventories there and crimping demand, a Netherlands-based trader.

“Everything is pretty much hand to mouth at the moment,” the trader said. “Buyers are looking at the offers coming in and seeing that it is possible to put in lower bids and have some success with those.”

Several market participants said they expect May shipments to be strong, which could limit demand. The industry shipped 219.4 million lbs in May 2021. Recent shipments from California have been higher, reaching 245 million lbs in March and April.

The possibility of higher May shipments has made importers cautious in Dubai, where prices have dropped 20 cents, said a trader.

For most items, selling interest appeared to remain firm against lackluster demand in key markets.

Current crop demand showed little signs of reviving from China, where Covid-19 virus controls have weakened the economy and congested a key port in Shanghai. The problems have made some exporters wary about shipping containers to the country due to concern that importers there will be unable to take possession of product.

Shipments from California to China reached 105 million lbs from the start of the crop year to April, down 27% from the same period last year but still up compared with the same period in the 2019-2020 crop year.

European demand

Demand appeared calm from Europe, too, amid a swathe of recent national holidays in the region.

STD5 traded in a $1.75-$1.81/lb FAS range for prompt shipment, with an offer falling to $1.74/lb FAS on Tuesday.

Speculators are nervous about taking large positions in the STD5 market due to a lack of price volatility and growing concern about low levels of consumption in Europe as inflation hikes beset most countries.

Some respite for sellers of Californian almonds in the region is that the euro has recovered slightly against the dollar to over $1.07 in recent days, thus increasing buyers’ purchasing power. The euro sunk to a multi-year low of below $1.04 on May 13.

However, a Spanish source said increases in spot rates for container freight were negating the currency reversal. He said current freight from Oakland to Valencia had firmed to 16 cents/lb from as low as 7-8 cents/lb a few months ago.

One U.K.-based trader said buyers in Europe were bracing themselves for the possibility of freight logistics bottlenecks worsening in U.S. and European ports as trading activity in Shanghai returns to pre-lockdown levels.

Freight carriers sending empty containers to China to secure higher freight rates than front-haul voyages from California have been cited as a key reason for the shipping delays that have beset the industry over the last several months.

The trader said buyers who usually take delivery at smaller European ports were now considering transferring to larger ports and paying more for inland haulage to receive their goods.

One large buyer in Spain said his company remains off the market as they wait for pre-booked containers to arrive.

In India, INIS price discounts to NPIS have spurred buying for INIS, market participants said. Those discounts in recent weeks reached 28 cents, up from the average this crop year of 21 cents. On Tuesday, the INIS discount to NPIS fell to 20 cents.

An apparent constricted supply of NPIS is also spurring demand from India for INIS, participants said. Importers in India frequently buy INIS to crack out and mix with Nonpareil kernel.

Trade activity fell during the May 24 to May 31 assessment period, according to Stratamarkets data, partly a result of holidays in Europe and the U.S.

The market received no new reports on supply and demand in the assessment period. The Almond Board of California (ABC) is scheduled to publish its next position report on June 10.

“There’s not much that can move the market at this point, unless we can (ship) over 250 million lbs, that could at least stabilize the market,” said a Madera County packer.

New crop trade

Most sellers continue to price new crop STD5 at a premium to current crop to incentivize buying of the latter. California’s carry-out is expected to reach a record high level and will consist primarily of small-size SSR-grade items that are typically sold as STD5.

As a result, new crop STD5 continued to trade at a slight premium to current crop with trade activity focused on the Q4 shipment period. However, other assessed new crop items were valued at discounts to current crop.

New crop NPIS trades for September shipment traded from

$1.72-$1.78/lb FAS. Stratamarkets assessed new crop NPIS this week at $1.72/lb FAS, an 18-cent discount to current crop NPIS.

Demand from China picked up for new crop NPIS and should continue driving demand until August, a Kern County packer said.

New crop demand from India has been light, the packer added, though he expects the market to firm due to a shortage of inshell in the 2022-2023 crop year as packers crack it out to make space for the new crop and the carry-in.

“If I could store all my inshell until January and sell then, I would do it,” said the packer, adding that his own space limitations will prevent him from doing that.

The stability of prices in the global container market in recent months contrasts with price volatility for much of the current crop year.

Prices climbed at the start of the crop year, peaking in September before a long bear run brought prices to a crop-year low in February. Prices climbed back from there but have been level since April.

On Tuesday, the Stratamarkets Almond Index remained unchanged at $2.20/lb FAS, and is up 2.6% compared with the year-ago week.

The SAI is an unweighted average of Stratamarkets’ 15 weekly kernel price assessments and three inshell assessments on an edible meat basis.

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