Potential for tight storage next crop year  is unlikely to crimp inshell supply

June 8, 2022

Storage space in California could be limited at the start of the new crop year due to what is expected to be another large crop on top of a record carry-in, but few packers believe it will result in less inshell supply.

The question of how much inshell California will make is important for sellers and buyers alike, and a question that is typically asked beginning this time of year. Sellers earn significant price premiums from inshell, and buyers in key markets such as India and China rely on inshell supply from the state throughout the year.

While inshell takes up more space compared with kernels, there are ways to manage it. However, the price of inshell and its premium to kernels will ultimately dictate how much inshell California makes, multiple packers said.

“Storage is an issue, but price will drive those decisions,” said a Kern County packer.

Potential space constraints

With crop estimates for the coming year at roughly 2.8 billion lbs on top of what is expected to be a record carry-in, total supply this crop year could exceed last year’s 3.5 billion lbs.

California typically turns about 15% of new marketable crop into inshell, according to Almond Board of California (ABC) data. Marketable crop is current receipts minus loss and exempt.

From August to April, the latest reported month of this crop year, California shipped 374 million lbs of inshell. The chart below shows inshell shipments from California as a percent of new marketable crop from 2017 to the present:

Because inshell takes up more space compared with kernels, packers could be incentivized to make less inshell this year due to storage concerns.

A normal 4×4 foot wood bin can hold about 2,200 lbs of kernels, but only 1,400 lbs of inshell. Ordering new bins isn’t a solution because wait times have increased to roughly six months due partly to supply chain problems. The cost for new bins has also risen from roughly $130 to $270.

Still, there are solutions.

Packers can store almonds in trucks or stockpile them in orchards before they’re hulled, which could ease space constraints during the Nonpareil and Independence harvests, which come earlier than harvests for other varieties. 

Packers can process inshell last, with the hope that strong kernel sales and shipments early in the crop year will free up bins. Alternatively, they can process, sell and ship inshell early in the year, with the hope of freeing up bins for the pollinizer harvest.

“But I don’t think we’ll see it,” a California-based trader said.

“We’ll see the old way, where you make some inshell and some kernel, and doing that will cause storage issues because they don’t have the bins.”

Inshell price premiums

Ultimately, the inshell price premium to kernel will determine the quantity of inshell packers make.

This crop year, the Nonpareil Inshell Edible Meat (NPISEM) price differential to NPX 27/30 has ranged from a 61-cent premium to a 7-cent discount, according to Stratamarkets data. The average premium this crop year is 21 cents, compared to 36 cents last year.

On Tuesday, the new crop NPISEM price premium to new crop NPX 27/30 climbed to 16 cents from 3 cents last week.

The INISEM price differential to INX 23/25 has ranged from a 46-cent premium to a 28-cent discount, with a 4-cent premium the average compared to a 23-cent premium last crop year. The INISEM premium has disappointed sellers this crop year, which could discourage additional INIS production in the coming crop year.

As packers contemplate how much inshell they’ll make for the new crop, they’re certain their plans will evolve as they assess new crop pricing and shipping realities.

“We have a plan, but that plan changes,” said a Stanislaus County packer.

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