Almond Market Update - October 20, 2022

By: Richard Andonian

California weather continues to remind us we are very much experiencing drought-like conditions. We have enjoyed an extended summer this October as temperatures are hitting the low 90’s this week, however, a cooling trend with expected temperatures in the low 70’s is forecasted for next week. Unfortunately, cooler temperatures do not signify rain, as we are expecting another dry ten days. Growers have all but finished harvesting now, with only a few finishing up in the next week or so. Harvest ending provides the greenlight for cooler temperatures and welcome winter.

Since the release of the Almond Board's September shipment report last week, the market has reflected a weakening. September shipments proved to be a disappointment for the industry as only 188 million pounds were shipped, compared to 227 million pounds shipped last September, a difference of -17.2%. The industry has quickly slipped below shipments year over year. While there is no need to panic, it is factual to state that this trend cannot continue for too long before more action may be required. No matter the price, demand has not caught up with current supply at destinations. Until the 2021/22 inventories are flushed through, we may see this lag continue for a month or so.

As the almond industry depends on global demand to the extent that approximately 68% of the crop is exported, the reality of the world economy is certainly in play here. With the US dollar strengthening, this reduces the purchasing power of those key markets the industry so much depends on. They, too, are experiencing inflation, in some cases even worse than what we face in the USA. They are experiencing escalating energy costs and shortages due to the war in Ukraine and the sanctions applied to Russia. As a result, most export regions posted negative shipment numbers last week. Unfortunately, there is no quick fix.

• Position Report:November 11, 2022
• Almond Board of California Annual Conference: December 5 through December 8, 2022
• Position Report: December 13, 2022

Bullish Trends:

1. Demand is starting to increase, as pricing again reflects historic values. If it ever reaches the retail consumer, we will see consumption rise again.
2. With the drought continuing, supply may be strong for now, but the future is firmly in question. Growers will be forced to manage their orchards according to the resources available to them.
3. Current market levels are not sustainable over time and will most certainly correct in the months ahead.

Bearish Trends

1. The value of almonds has not necessarily been reflected at grocery retail to the consumers for 18 months now. It reflects in the Neilson and IRI numbers, and the snack aisle has declined due to a lack of promotional activity.
2. Until the bottom of the market can be found, buyers need the confidence to purchase or there will be reluctance to book.
3. The industry will continue to swim against strong currents, as shipping issues continue, and the global economy fights against inflation to try and avoid a recession.

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