Cashew markets are slightly soft due to a lack of major buying activity. Due to high freight costs, especially to the EU, many cashew buyers have postponed shipments. This has left higher than expected spot stock in the hands of Vietnamese shippers. The shippers who have stocks are trying to sell them for cash in the spot market before they close the new year. How the markets will behave after the Chinese New Year break will depend on how the crop develops.
At this time, we expect a normal crop across Asia and West Africa.
The December position report was released Tuesday January 12. We continue to see record monthly shipments. This is five months in a row now for the new crop year which started in August. If you include the final month of the last crop year (July), we have had six record shipments in a row. This can all be contributed to the growing popularity of almonds, innovative new products and value market levels compared to other tree nuts.
Crop receipts jumped up to 2.86 billion pounds now received. This will most certainly lead to the anticipated Subjective and Objective estimates of +3.0 billion pounds for the 2020 crop year. There were also additional sales added on in the month of December with over 172 MM pounds of almonds. This is above last year’s 166 MM and the 170 MM three-year average. This leads to continued pressure on production through March/April. Expect to see firming price levels continue. December shipments were 257 MM pounds, almost a 25% increase over the previous year. This brings the YTD to 1,283.8 billion pounds, 22% ahead of last year at this time. Combining what has currently shipped with what is now committed to at the end of December, the industry total sales are 2.2 billion pounds, up 33% over LYD and represents 65% over-all sales to date versus total supply.
We continue to see export shipments delight the industry. Even with the Chinese tariff firmly in place China is up 54% YTD. India also up significantly +79% and throughout the EU +13%.
The industry is on pace to ship +2.82 billion pounds this year and have a carry-over of +570 million pounds.
2020 crop was the largest on record, with an overall supply of over 1 MN MT across all origins. This year’s crop quality from the US has been exceptional, with only 8% closed mouth pistachios against an average of 12-13%. Given the limited volume available to shell, the availability of kernels in the market has significantly decreased.
California opened pricing for in-shells from the new crop at $3.70/lb FAS compared to $4.40/lb a year ago. However, kernel prices still remained strong, at $7.75/lb (same as last year) for USX1 Wholes and $6.60 - 6.90/lb for USX1 large splits.
There has been a 72k ton increase in availability vs last season. Kernel sizes are slightly smaller, color is a shade darker than last year. We are seeing record FTM shipments, yet shipment numbers could have been even higher had there been no port congestion or COVID-19 led production hiccups. Inshell exports continue to lead the growth, with shelled exports also seeing a significant increase.
Asia & Middle East continue to power the demand, with India up by 263% and Korea up 38% YTD. All Middle Eastern countries are up, with a YTD increase of 32%. Even China imported 2,900 tons. Lower prices, relatively less impact of COVID-19, and higher traditional consumption of walnuts in Asia seem to be the reason behind strong demand. FTM shipments to Europe and US were flat. While container availability was an issue, resurgence of COVID-19 in these territories is correlated with demand. While Korea, Japan and few other handful markets in the Middle East buy shelled, most of the demand in Asia and Middle East is of Chandler inshells, which are eventually hand cracked locally. The walnut industry doesn’t report commitments, but its generally believed that Chandlers are now well committed. On the other hand, the USDA has just announced purchase of additional $20 mm in walnuts to support the walnut industry.
While the U.S. peanut harvest has been complete for a number of weeks now, small quantities of farmer stock continue to be added to the U.S. Peanut Tonnage Report. As of 1/7/21, a total of 3.052 million tons had been graded. The pace of the new additions has dramatically slowed over the last several weeks, so one can assume that “final” receipts may very well be below 3.1 million tons. Presently, overall receipts stand at 8% below the USDA estimate or a 268,000 short ton difference
All eyes will begin to turn to the estimate of 2021 crop estimates that will be released by NASS in March of 2021. This number will have an impact on market prices for the 2nd quarter of 2021 and will be heavily influenced by the price of cotton (Dec 2021) that has seen strong increases over the last month.
Australia further updated their 2020 crop size with an increase to 46,500 MT. This reflects to an 8% increase in crop year on year basis while initial estimates had been of a shorter crop due to drought situations prevailing in growing regions. For the upcoming 2021 season growers are optimistic of a good crop with no major concerns on crop size or yield. Both in Australia and South Africa, business discussions have started for next year’s crop and we should see new harvest flows coming from February onwards. On the demand side, there have been short term spurts, especially in Asia due to Chinese New Year. This has led to clearance of destination and pipeline stocks making way for new flows. For Q1 the demand is expected to be steady and may further push up in China and Japan especially once the situation is better.
Sesame: Pricing has remained relatively stable recently, with a variety of factors influencing the market. In China, the world’s largest sesame market, port stocks have stayed level for a few weeks. Some regions within China are experiencing a total lockdown, which means lowered hulling capacity and demand. Conversely, there remains potential for delayed shipping globally, and a potentially strained supply. The result of this dynamic seems to be buyers and sellers each holding off on committing to a direction, hoping the market turns in their favor.
In India, there continues to be delays on export shipments and potential for late arrivals on contracts through the first few months of 2021. Pricing on Indian Hulled Sesame is also steadily increasing but remains at a discount to African origins.
Regarding African origin sesame - price remains level but is still at a premium when compared to India, due to reduced production from certain regions. You could significantly reduce your exposure to any potential shipping delays by splitting some volumes between the two origins.
Quinoa & Chia: Peru continued to maintain the leadership position in 2020 by globally being the largest exporter with around 50k mt of exports. January to date has been slow both at the origins and mainstream markets with streched holidays, political ferment and COVID-19 waves. Quinoa sowings for the new season have had no weather impact till date and a full crop is expected next season, unless rain surprises close to flowering and harvest. Buyers have opened up to discussion for the first quarter demand and expect improved prices with the supply squeeze on organic quinoa. With Chia origins being in off-season and stocks at lower levels, inquiries have increased for organic chia from Paraguay, Bolivia & Peru.
The overall hazelnut supply for the season seems adequate. The Turkish crop has been as expected, as well as other origin crops. Though arrival in the Turkish market was lower in earlier months, supply has slowly caught up. Turkish exports were lower than average until December, indicating that enough supply is available for the rest of the season.
The overall demand seems similar to previous years despite COVID-19 concerns. While retail chocolate and spreads are witnessing no reduction in demand, the gifting / duty free chocolate segment and HORECA segments have been adversely hit.
The local market in Turkey continues to be rangebound in a narrow range – the TMO price rendering the support, but most buyers unwilling to source at higher levels.
The last few weeks are also marked with a sharp currency appreciation – The TL has appreciated from lows of 8.50 during November to 7.35 by end of week 2. The TL prices have not reacted in tandem and have held levels higher than the TMO benchmark.
COVID-19 lockdowns remain a concern. Though we have not seen major impact on retail, HORECA and food service sectors remain under pressure with lockdowns in most of Europe.
The next trigger the market will look forward now is the new crop development – flower count in January/February. The unusually hot December was slightly adversative, with a possibility of early blooming and heightened frost risk. However, January temperatures have been normal, and we believe for now there is no reason to believe that the crop size for next season will deviate much from the average.