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The Almond Board released the November shipment report on Tuesday, December 15th. Key highlights as below:

Receipts

There were an additional 603 million lbs. of receipts recorded in November, bringing the season total to 2.413 billion. This is 331 million higher than last November, ahead by nearly 16% YOY.

If we compare this to YTD receipts of November 2019, which accounted for 81.64% of the total crop, then assuming the same percentage would put the 2020 crop at 2.95 billion.

However, it was evident early on that the infrastructure was not there to accept this additional tonnage at the same rate. Many huller/shellers reached out to growers asking for them to hold off on delivering their inshell almonds until they could run more, as their yards were full. Therefore, we should not assume the same percentages have been received. With just a minor adjustment to the percentage received, hypothetically bringing it down to 80% would result in a crop estimate of 3.02 billion lbs.

Given this, the industry will continue to operate based on the expected 3.00 billion lb. crop. Arguing a slight difference either way is just splitting hairs as it will not have a material impact. With the supply side more or less agreed upon, all focus now turns to continued demand, California weather patterns and the all-important bloom in February.

Shipments

We have had five months of record shipments in a row, including July, with four consecutive months this season thus far. California set a new record for shipments with 263 million lbs. shipped in November, up 11% from the 235 million lbs. last November. This is coming off the largest month in reporting history, with 310 million lbs. shipped in October.

A new milestone has been reached after just four months, as year-to-date shipments now stand at 1.02 billion lbs., up 21.47% from last year.

Domestic shipments were 67.69 million lbs. for the month and brought the season total to 270 million lbs., up nearly 13% over last year. With continued lockdowns across the country and an increase in at-home consumption, we expect the domestic market to grow between 10% to 15% this season.

Exports for the month were 195 million lbs. and season totals now stand at 755 million lbs., up 25% over last year.

The November shipments to India were 33 million lbs., which is 16% higher than last November. This now appears to be more sustainable growth levels as compared to the 168% and 62% growth experienced in previous months.

Given the huge growth in the first few months of the season, if India levels off at 10% growth for the remainder of the season, it would end the season up 40%. With almond prices being significantly lower, we are witnessing increased substitution of almonds over cashews, further enhancing the growth in the India market.

Interestingly, shipments into China/HK/Vietnam were a solid 37 million lbs., up 102% over last November. Year-to-date shipments are now standing at 111 million lbs. up, which is just shy of the 113 million lbs. that China imported over the entire 2019 crop. Given that we still have one more month of shipments to cater to Chinese New Year demand, we could see a continued increase in shipments to China this season which would help generate additional needed liquidity.

Sales & Commitments

Sales in November were a good 235 million lbs., up 23% over last November’s sales.

As a result, commitments stand at a solid 1 billion lbs. which is 55% higher than last November.

With this, our industry has now sold (shipped and committed) 60% of total supply as opposed to 53% last year at this time.

This is a good position to be in as our industry has repeatedly shown that no matter the size of crop, it will be marketed. The question is, at what price?

Since the release of the November Position report several handlers have gone off the market and we have seen offers rise anywhere from 5 to 15 cents depending on the variety and size.

There is currently good demand to be had at these improved price levels. However, with the holidays fast approaching, we may not see renewed selling support from the industry until January. If this is the case, the December position report may potentially take some of the air out of this market, if it shows large receipts and low sales.

For now, the focus turns to California weather patterns and 2021 bloom, and of course enjoying the well-deserved Holidays after this challenging year.

We wish everyone and their families a very Merry Christmas and very happy end to 2020!

In A Nutshell...

On a fundamental note, California handlers have sold 84% of the current crop. This is typical for this time of the year and we have started off with a much better sold position for the new crop.

Most handlers and traders seem to have arrived at some kind of resolution with their buyers on their existing contractual obligations and both sides are now in a position to move forward.

As a result, we have started to see increased activity from India and the Middle East. With prices being at the lowest this decade, almonds are at a great value. As one of the speakers at the INC Almond Webinar said “Once you hit rock bottom, you can’t shovel any lower.”

The initial reaction to the position report was one where traders tried to cite poor shipments in order to bid the market down 10 cents ($1.70 stds). California handlers have resisted to some extent and by Friday we did see bids inch back up to $1.73 levels and are expecting it to stabilize around $1.75 - $1.78 levels. All of the above would indicate that while we might see market come off a few cents from pre-report levels, overall we should see some stability in the market leading up to the release of the Objective estimate on July 7th.


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