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Prices decline despite strong May shipments

June 15, 2022

Prices dropped for most items in the global container market the week ending Tuesday as concerns about oversupplied markets countered robust May shipments.

“Normally a good shipment report helps the market,” said a Stanislaus County packer on Tuesday, referring to the price decline that began after the release of the May 2022 position report. “You would think it would be driving prices up.”

The report showed shipments of 258 million lbs, a new record for the month, and strong new monthly sales. The Almond Board of California (ABC) released the report on Friday. (See story on Pg. 5 for reaction to the report.)

But prices didn’t respond to the report the way sellers might have hoped. Benchmark STD5 and NPX prices fell. Inshell prices slipped on weak Indian demand due to a supply glut and soft new crop prices. Pollinizer prices were mixed.

European demand

STD5 traded at $1.75/lb FAS for most of the week, including a trade at that level Friday. The item was offered Monday at $1.74/lb FAS, and a packer reported trades on Tuesday at $1.70/lb FAS and $1.73/lb FAS.

Stratamarkets assessed the item on Tuesday at $1.72/lb FAS, its lowest level this crop year. The item is down 9% compared with the same time last year, pushed lower by a glut of small-sized, SSR-grade material and the likelihood of a big carry-out.

Weaker foreign currencies versus the dollar also dampened overseas demand, market participants said.

The Euro fell to $1.04 against the U.S. dollar on Tuesday, a four-week low, while the yen was trading at a 24-year low.  The Indian rupee continues to fall against the dollar. The U.S. Dollar Index, a measure of the buck against a basket of six currencies, surged this week to its highest level in years.

“Not a lot of attention needs to be paid to (currency rates) usually, because they trade in normal fluctuations, but the dollar is stronger, and our prices have not changed relatively,” said a California-based trader. “So, to the overseas customer, prices have gone up.”

European traders said almond demand has slowed with most inquiries for short covering rather than refilling stocks. A significant chunk of fourth quarter demand has been filled, according to buyers in Europe.

“In Northern Europe, it feels like most people are only buying if they have sold something and need to cover it,” said a German marzipan producer. “Otherwise, the message is, ‘we have enough, we don’t need anymore.’”

Despite the currency and inflation issues, one U.K.-based trader said STD5 prices have been locked in a relatively tight range for several weeks. That could present a buying opportunity.

“If I was an end-user and I saw that almonds were pretty much the same price in dollar terms, I’d see it as one thing I could stick in my non-inflated prices pile, because everything else has got much more expensive,” the trader said.

Sellers are offering an abundance of SSR-grade items with their price premiums to STD5 increasing after narrowing in previous weeks.

The premium for a basket of SSR-grade items to STD5 rose from 10 cents to 14 cents. The premium could compress in the coming weeks as sellers work to slim inventories ahead of harvest, participants said. 

“STD5 will go down the slowest, and everything else will come down to STD5,” said a California-based trader.

Inshell market

Few inshell trades were reported as prices fell and buyers in India withdrew from the market.

Low new crop prices have spooked current crop buyers. They were actively buying around $2.00/lb FAS a month ago, but not now. New crop NPIS prices fell 2 cents to $1.74/lb FAS.  

The market in India is also dealing with a large supply due to the arrival of hundreds of containers in a short period. California shipped more than 33 million lbs to India in May, up 142% from the same month last year. It was the largest number of containers sent to India from California in a single month since September 2021.

“These strong shipments will temper demand for the short term,” California-based Blue Diamond wrote in a market report published on Tuesday, referring to demand in India.

But the softer demand in India is likely to be temporary.

“Australian crop quality issues due to a wet harvest combined with a shorter supply estimate will support the need for California almonds,” wrote Blue Diamond. “While the Indian trade is filling pipelines for Diwali season, other festivals and daily consumption will continue to drive demand throughout the year.”

Stratamarkets assessed NPIS on Tuesday at $1.79/lb FAS, down 19 cents from its year-ago price. After the assessment period closed, a trader reported a transaction for NPIS sized 27/30 at $1.75/lb FAS for July shipment, indicated prices could have slipped further.

New crop

Key new crop price differentials to current crop remained steady on the week. The NPIS current crop price premium to new crop stayed flat at 5 cents. The STD5 new crop premium to current crop rose to 8 cents, up 3 cents.

Some U.S. buyers were in the market for big volumes of large-size Monterey, Carmel Type, and Nonpareil kernels for shipment beginning in January. U.S. buyers see little downside.

“It can’t get much cheaper,” said a packer who did some of that new crop business in the U.S. market. “Buyers are getting smart and seeing no risk buying long at this point.”

New crop sales reported in the May shipment report reached 129 million lbs, down 44% from same period last year.

The Stratamarkets Almond Index fell to $2.12/lb, down 3 cents on the week and down 9 cents from the year-ago week.

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