First position report of the new crop year shows better fundamentals for sellers

September 14, 2022

The previous crop year began on a disappointing note for sellers, with an initial position report showing dismal monthly shipments and new sales. It was the first of several bearish reports that ushered in a steady decline in prices that have yet to fully recover.

The first report for this crop year shows a better start for sellers. Released on Friday by the Almond Board of California (ABC), the August 2022 position report shows record month year-on-year shipments, stronger new sales, and a decline in crop receipts compared with last August.

“It was definitely better than I expected,” said a San Joaquin County packer on Friday. “My thought would be California will more or less demand some kind of increase across the board or withdraw.”

By Tuesday, however, prices hadn’t responded as sellers hoped. The Stratamarkets Almond Index ended the September 6 to September 13 assessment period unchanged at $2.09/lb FAS.

The report showed shipments in August reaching 228 million lbs, up 35% on the month and 10% from last August.

Sources said the surge in shipments is partly explained by a rollover of containers from July, when shipments were impacted by shutdowns at the Port of Oakland. Combined July and August shipments at 398 million lbs are down 9% from the corresponding year-ago period.

Exports accounted for 71% of total August shipments, reaching 163 million lbs, up 45% on the month and up 16% from last August. Exports to the Middle East increased 174% month year-on-year.

Exports to the region likely included a substantial chunk of 2021 crop, said the San Joaquin County packer. “I think what happened in August was there were definitely some packers who just blew out their leftover 2021 Nonpareil,” the packer said.

A U.A.E.-based trader agreed that the jump in exports to the Middle East was due to large volumes of Nonpareil and Independence kernels from the 2021 crop sold at discounts to 2022 crop.

“Some of those loads may get resold by traders in Dubai,” the trader said. “They can divert the containers to other local markets.”

Exports to North Africa showed the sharpest increase, spiking sevenfold month year-on-year in a move that baffled many market observers. Exports to Western Europe, the largest market for California almond by region, increased 1% to 57 million lbs.

Shipments to India contracted 39% month year-on-year. The decline is mainly the result of an earlier Diwali this year in India, which makes it challenging for importers to satisfy demand from the new crop.

New sales in August reached 196 million lbs, up 56% on the month and up 42% month year-on-year. The reported numbers do not differentiate new sales by crop year, but sources agreed there was likely a substantial amount of 2021 crop supply in August new sales.

“One of the reasons for the high August sales was the motivation to get moving on 2021 crop,” a U.K.-based trader said on Tuesday.

New sales to-date left California in a sold position of 24.9% of the 837 million lb carry-in plus the estimated 2.6 billion lb crop. In the past 10 years, California’s average sold position for August is 27.5% of carry-in plus crop.

Crop receipts in August reached 264 million lbs, down 15% from receipts last August. In the past 10 years, August receipts have, on average, made up 12% of the total crop, although with a wide variance to the lower and upper ends depending on the year.

If the average holds this year, California is tracking toward a smaller crop than the USDA estimated in its objective forecast.

However, sources said it’s difficult to draw accurate conclusions about the crop size from receipts this early in the year. Harvest delays in some parts of California and growers stockpiling almonds prior to sending them to be processed could have reduced August receipts, sources said.

In recent weeks, though, an increasing number of growers have cautioned that crop size and quality could be down from last year, particularly for Nonpareil.

“So far, with Nonpareil all in and pollinators arriving at hullers we would give general guidance that turnouts are lower than usual and per acre yields are off from last year, with the freeze impacted north more pronounced,” packer Treehouse California Almonds wrote in a market update published on Friday. “We are hearing yields impacted by as much as 40% in the north, 15% in the central region, while in our southern region we are more informed and can report yields even to slightly off so far in mature Nonpareil blocks.”

Inedible almonds represented 2.03% of August receipts, the highest on record for August. Since 2009,  inedible product has made up 1.54% of August receipts, with a low of 0.67% inedible in the 2011-2012 crop year.

Crop receipts are likely to be a key price driver in subsequent position reports.