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The Almond Board of California released the July position report on Thursday, August 12th, and with that the 2020 crop season is officially wrapped up.

Shipments

July was another month of record shipments with domestic shipments of 70.9 million lbs. (up 4%) and exports of 158.5 million lbs. (up 42%) bringing total shipments to 229 million lbs., which is 27% higher than July’s previous record of 180 million lbs.

While pending final adjustment for the Loss and Exempt, the carryout for the 2020 crop is 596.8 million lbs. which is equivalent to just about 2.6 months of shipments. This is a feat in itself given that less than 6 months ago the industry was forecasting a carryout in excess of 750 million lbs. Clearly global demand for almonds continues to grow.

Some highlights and facts of the 2020 crop season are listed below:

  • Supply – California produced 3.106 billion lbs., an increase of 21.78% in a single year. It took the industry just 10 years to grow from 2 billion lbs. (2011) to 3 billion lbs.
  • Demand – California shipped out 2.898 billion lbs., an increase of 22.16% in a single year. Clearly demand is keeping up with supply.
    • There is no doubt that some of this was on account of the low price levels of the last year. We believe that even at current levels almonds represent good value.
    • Season total domestic shipments were 808 million lbs., a growth of 4.4%.
    • Season total export shipments were 2.09 billion lbs., a growth of 22.2%.
    • India was the single largest export market for California almonds, importing 362 million lbs. (up 42%).
    • Despite the trade wars, China seems to be coming back to the party importing 196 million lbs. (up 74%). This is the second highest imports in the last 5 years, the previous record being 225 million lbs. in 2017.

Sales & Commitments

  • Old crop sales in July were 77 million lbs., bringing the total commitments to 344 million lbs. This means nearly 60% of the 596 million lb. carryout is already accounted for.
  • New crop sales in July were 115 million lbs., bringing the total new crop commitments to 441 million lbs. This means the industry is about 15% sold on new crop.
  • It can be argued that California is undersold versus last year at 23.5% sold of total 2021 crop supply currently vs 27% at the same time last year. However, it is important to point out that last year the California almond industry was pushing for higher sales in anticipation of the larger crop while this year they are holding back basis expectations of a poorer harvest. It is also important to look back historically. If we look at 2019, for example, the industry went into the new crop with a sold position of 14%, which is in line with historical levels, versus our current new crop sold position of 15%.
  • Similarly, it is important to look at total commitments and not just new crop commitments, as the carryout is what is primarily to be shipped in the first few months of the season.

In summary, the Californian industry is quite comfortable with their sold position and hence are unlikely to be under pressure to drop prices in the near future.

2021 Crop Update

Initial reports of Nonpareil harvest are suggesting low yields and poor sizing. Sizes on material run at hullers so far are averaging 30-40 AOS. This is extremely small but comes as no surprise as typically the early harvest is of water stressed orchards. While things might improve once we get into better irrigated orchards, the fact remains that overall sizing on this year’s Nonpareil is going to be worse than last year. As a result, we are likely to continue to see large premiums for bigger sizes. Given the small kernel sizes and higher inshell premiums (nearly 60 cents) we are likely to see more growers/handlers try to maximize their inshell program this year. Over time the inshell premium will most likely come back in line, but whether that is on account of inshell prices coming down or on account of kernel prices going up is yet to be seen.

Market Update

Port conditions continue to be a challenge and as result inventories at most destinations are running thin, resulting in higher bid levels both for destination and origin stocks. All eyes are now on harvest and it will take a few more weeks before the industry gets a better view on the potential for the 2021 crop. Growers know that the 2021 crop has been set and while it will take a few weeks to know their overall yield/return, they are more concerned about water and the impact that another year of drought will have on next year’s crop. As a result, we are unlikely to see much selling interest/pressure in the near term and as long as demand continues, we should see firmer markets.


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