The Almond Board of California released the December position report on Friday, January 11th.   Key Highlights as below:

The most talked about statistic on the report has been the receipts number.

Receipts in December were 215 million lbs. – a mere million lbs. higher than last December. This brings the year-to-date receipts to 2.202 billion lbs., which is slightly lower than last year’s 2.207 billion lbs.

See below scenarios on projected total crop, basis historical receipts for January – July:

See below scenarios on projected total crop, basis historical percentage of crop received by December:

From the above, it is now evident that the crop will not make the industry expectation of 2.30 - 2.35 billion lbs., let alone the NASS estimate of 2.45 billion lbs.

At this point, our inhouse estimate is 2.25 billion lbs., slightly lower than even last year’s 2.26 billion lbs.

At 199 million lbs., December shipments were marginally (2.43%) down over last December’s 204 million lbs.

Year-to-date shipments now stand at 1.007 billion lbs., just 3% lower than the 1.038 billion lbs. last year. Though shipments are still down on a year-to-date basis, California has managed to significantly reduce the shipment deficit from 10.04% in September to 3.01% in December.

The industry was expecting December shipments to exceed last year’s 204 million lbs. Hence, a lower number was a bit of a dampener for few. However, the reduction shouldn’t have been a surprise given that the port of Oakland ran out of containers around the 18th of December, resulting in several loads being rolled into January. When we consider that Olam alone had 2 million lbs. rolled, it is safe to assume that had container availability not been an issue, this number could easily have been in excess of 210 million lbs.

See below tables on historical shipments for December and year-to-date December:

Domestic demand proved reliable once again, resulting in another record month — the 9th monthly record set in the last 12 months. Year-to-date domestic shipments stand at 303 million lbs., or 2.44% higher than last season. Given the number of new innovations using almonds that were presented at the Fancy Food show earlier this week, it is safe to assume that domestic demand for almonds will continue to be robust.

Export shipments in December were 146 million lbs., down 3.54% from last year’s 151 million lbs.

For the month shipments by key markets detailed below:

Export shipments in December were 146 million lbs., down 3.54% from last year’s 151 million lbs.

For the month shipments by key markets detailed below:
Shipments into the Middle East are finally showing signs of recovery. UAE alone took 13.7 million lbs. this December, versus 4.92 last December. Similarly, Saudi Arabia took 3.34 million lbs. this December, versus 1.37 last December. Given that both Iraq and Iran will be in the market to cover their Navroz demand, and based on sales done in December, we expect this trend to continue in the coming months and we should see this region move back up.

Exports to India were flat for the month and down 7% on a year-to-date basis. This means we should see additional buying activity from India, especially since they will have to look towards California to make up for the shortfall from Australia which given current trade conditions will be diverting its inshell to China this year.

China was significantly down this month but given the heavy shipments last month and the recent crackdown on cross-border trade, this was bound to happen. What is interesting to note is that even with the trade wars, crackdown on cross-border trade and low shipments, Chinese imports were just 7% down over last year. This is a stark contrast from the 50% that some feared when the trade war first started.

See below year-to-date position for key export regions:

At the end of December, commitments for the industry stand as below:

This means that in the month of December, California sold an additional 179.6 million lbs. To put this in context, last year December sales were 165 million lbs. while in the preceding two years it was 103 million lbs. and 123 million lbs., respectively. This just goes to show that even through the holiday month, buyers continued to seek additional coverage and as a result we should see good shipments for January.
Slots for January are completely filled and several handlers have mentioned that February slots have been closed as well.

Over the next few weeks it is likely that buyers may try to shift the focus to the 2019 bloom and the possibility of a significantly larger crop. However, the fact remains that the 2019 crop will be available only starting in August and we will have a tight transition into the new crop. Small size pollinators are already scarce which means we could see that price rising through the summer. Given that the Nonpareil crop is trending 4% lower than last year, it is safe to expect that we will see that pricing increase as well as supply reduces and offers dry up.

We believe shipments in the coming months will exceed previous records, but even if we consider a 2% lower shipment month for the next 6 months we come up with the below balance sheet:

Over the last two weeks we have seen increased buying activity across markets as buyers wanted to take additional coverage prior to this report. With receipts trending down, they are likely to be happy they took coverage when they did.

Assuming the crop comes in at 2.250 billion lbs., it means California has already sold 70% of the crop and 61% of its total supply. This is only marginally lower than the industry position last year, which was 73% and 63% respectively.

Overall it puts California in a reasonable position, but there is still a decent amount of the 2018 crop that needs to be sold. Based on activity over the last two days, it appears that handlers will want to continue to sell and slowly inch up prices with each offering as they have been doing for some time now. This would be a good outcome as the industry tries to get to a better sold position prior to bloom which is just 5 weeks away.