Despite late April storms, California and the western states continue to face extreme drought conditions. Growers remain reticent in selling new crop, as well as current crop at reduced price levels. Despite the market trying to push levels down further, we have seen pricing firming even in the face of the largest carry-over in history.
While the industry continues to fight for space on container ships, we did see March shipments reflect these efforts with 245 million pounds shipped for the month. In fact, March was the best month of the crop year thus far. Shipping issues however do continue, only combated by processors paying more for containers and space on vessels than ever before.
This leaves the industry to date (through March) with 1.683 billion pounds shipped, 14.95% behind compared to a year ago. The April shipping report will be released on May 11th. With just four shipping months to go for the new crop year, expectations are for a carry-over close to
900 million pounds.
The USDA released the preliminary acreage report for 2022 stating a bearing acreage of 1.37 billion pounds for the next crop year. This is a modest increase of roughly 3.8% from last year’s bearing acreage of 1.32 million acres. The important takeaway from this is the decreasing rate of new acreage coming online, coupled with decreasing nursery sales for new trees also falling from previous years. The crop size is showing signs of topping out, trending down for the first time in many years.
Finally, the industry estimates 2.9 billion pounds for the 2022 crop, and a projected 900 million pounds carry-out, making the supply for the next season 8% higher than it was this year. We therefore believe market sentiment will continue to keep trading within a thin range of approximately $0.10 per pound from current levels. Maintaining this narrow trading margin will help keep demand growth on a positive trajectory, eventually bringing supply and demand back into equilibrium over the course of the next 12 months or so.