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Almond Market Update - May 23, 2023

California almond orchards are well on their way through the growing season, with larger-sized almonds compared to the previous drought years. The weather conditions are favorable, with temperatures ranging from the low 50s in the morning to the mid-70s in the Northern Valley and reaching the high 90s in the Southern Valley. Following the April shipment report and the Subjective Estimate, the market has displayed a weakening trend, with a decline of approximately $0.09 per pound for various almond varieties and sizes. April shipments totaled 197.26 million pounds, falling short of expectations and marking a significant decrease of 19.57% compared to the previous year's 245.24 million pounds. Domestic shipments in April were also weak, amounting to 56.8 million pounds, reflecting a 9.0% decline from the previous year. Overall, total domestic shipments to date stand at 544 million pounds, representing a decrease of 6.10% compared to the previous year. Export shipments in April were also affected, with 140.4 million pounds shipped, down by 23.2% from the previous year's record-setting April shipments of 182.8 million pounds.

The cautious approach of California sellers due to poor bloom weather resulted in lower sales for April, with new sales just under 115 million pounds, a 32% decrease from the previous year's 168 million pounds. This decline is significantly below the historical average of 142 million pounds in new sales over the past five years for the month of April. Consequently, it is expected that shipment numbers for both May and June will remain low. The Subjective Estimate for the new crop year 2023/2024 is projected to be 2.5 billion pounds, indicating a 3% decrease from last year's production levels. Despite the reduction, the industry hopes that this smaller crop size will help align supply with current global demand.

BREAKING NEWS: California, Arizona, and Nevada have agreed to voluntarily conserve 3 million acre-feet of water over the next three years, which represents 13% of each state's total allocation from the Colorado River. This conservation effort aims to protect Lake Mead and Lake Powell, two of the largest reservoirs in the country, which have been under significant pressure due to drought conditions in recent years. The federal government will provide financial support of an expected $1.2 billion, intended to benefit farmers. More details to follow.

Upcoming Industry Milestones:

  • Growing Period: The crop is well-established now and looking very healthy in most regions.
  • Position Report: June 9, 2023
  • Objective Estimate: July 7, 2023

Almond Market Insights - Week 20 Update:

Bullish Trends:

  1. Current crop market levels remain historically aggressive, and pricing has maintained consistency within a narrow trading band.

  2. Growers can now feel more confident in selling existing inventories with a clearer outlook on the new crop.

  3. The Subjective Estimate, which is 3% lower than last year's production levels, will help bring supply into better balance with demand if the industry can continue to improve shipments in the coming months.

Bearish Trends:

  1. April's decline in shipments, combined with a projected lackluster performance in May and June, may lead to a larger carry-out inventory than desired by the industry.

  2. Uncommitted inventory is now higher than last year, standing at 788.75 million pounds compared to 771.47 million pounds. The industry will need to muscle up to get back on track.

  3. The impact of high global inflation raises doubts about the near-term turnaround of shipments. Domestically, shipments remain challenging due to weaker consumption levels.

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