Colder temperatures throughout March and April may have slowed crop progression down. With that said, the willingness for some growers to sell has continued to slow things down as well. While we wait to hear how the current crop is doing, one industry analyst has already released an estimate for the 2023 crop to be 2.29 billion pounds, translating to 1,650 pounds per acre based on 1.39 million bearing acres. Another industry analyst has put the crop at 2.66 billion pounds, which works out to a yield of 1,958 pounds per acre on 1.361 million bearing acres.
At this point, it is best to just view these estimates as data points. With the storms we received during the bloom, it has become a crap shoot in determining this crop at the moment. Orchards vary from one spot to the next. With no one really knowing what will come off the trees starting in August, more data points will continue to be shared as they develop.
Two weeks ago, the Almond Board of California released March shipments. Monthly shipments were 281 million pounds, which was the largest single shipment month since October of 2020, and marks the third month in a row of record shipments. The importance of this cannot be over-emphasized as the industry now sits ahead of last year’s shipments by +6.85% with 1.798 billion pounds shipped year to date. Coupled with crop receipts currently at 2.541 billion pounds to date, which is off -12.4% to a year ago, we can clearly see supply is becoming more aligned now with overall demand for almonds.
The market has been relatively quiet as price levels have risen (rightfully so) following the shipment report and the poor bloom weather. There is demand, but thus far matching up buyer’s price expectations to seller’s price expectations has proven difficult. Perhaps as supply becomes more constrained and demand becomes more urgent, the two will meet and business will start getting done.
The slowdown of the Ivory Coast crop continued during April. We are not seeing great arrivals in the second flush, which indicates that the Ivorian crop will likely end similar or close to last year’s crops.
Demand for in-shell has been on and off, but still strong in respect of volumes. We are not seeing a significant increase of available in-shell as unsold. Still, with Kernel demand not as expected, this situation may change during the next months.
Vietnam and India are keen to source further from WAF in-shells, which will likely hold in-shell price to drop further.
The industry remains covering hand-to-mouth for nearby terms, driven by the Europe industry. We will continue to see this pattern for some time more as pipelines remains fairly thin.
Across main destination market coverages beyond August are poor, hence more spot activity is expected to happen, cashews are well promoted on the shelves which will stimulate consumption.
The Administrative Committee for Pistachios (ACP) reported crop receipts for the 2022 crop year remains unchanged at 884,139,54 pounds. Adding in the record 2021 crop carry-out, this would give us a total supply of ~1,176,356,358 pounds for the 2022 crop year. Shipments in March continued the upward trend seen previously in January and February (+33% versus last year), bringing the year-to-date shipments to 596,007,383 pounds (+8% versus last year). Export shipments year-to-date remain strong at 407,454,351 pounds (+16.2% versus last year), while domestic shipments year-to-date continue to lag at 188,553,033 pounds (-5.9% versus last year). Should the positive shipment trend continue, we will see the lowest carry-out since 2019.
In-shell pricing remains firm as inventory from the 2022 crop dwindles. There is still some uncertainty on how the floods in the Tulare Basin will affect the 2023 crop. We will continue to monitor the situation as it develops. However, overall, we are expecting larger 2023 crops from both US and Iran origins.
The CWB (California Walnuts Board) reported crop receipts for the 2022 crop year remains unchanged at 747,870 tons. This number has historically been adjusted up by the end of June and we expect the final crop number to be closer to 760,000 tons. Adding in the record 2021 crop carry-out, this would give us a total supply of ~895,000 tons for the 2022 crop year. This is a record total supply for the California Walnut Industry and 8% larger than the 827,824 tons of total supply last year.
Shipments in March continued the upward trend seen previously in January and February (+2.4% vs last year), bringing the year-to-date shipments to 463,064 (+3% versus last year). While the trend is positive, we are still falling short relative to the total supply needing to be sold. Unshipped inventory is 14.6% higher than last year. The USDA Section 32 purchase should help raise shipments to desired levels, but we will still need a big push in the coming months to lower the carry-out.
Commitments in March are down 23% versus last year and new sales FTM were down 49% versus last March. The sold percentage of total supply stands at 70.2%, down 9.9% versus last March’s sold percentage of 80.1% on total supply. We expect commitments and new sales to pick up significantly in the next report to reflect the USDA Section 32 purchase of 57 million pounds.
Our carry-out projection has been updated to 151,537 tons (11.3% higher versus last year). The USDA purchase should help ease some of the uncertainty surrounding the unsold combo product, which could spur sidelined buyers to rush into the market to secure their positions. Should this be the case, it is possible the carry-out can be moved even lower to more manageable levels.
The macadamia industry is expected to experience growth in 2023 as harvest is currently underway in major producing regions. However, lower farm prices continue to present challenges for growers, and processors are cautiously monitoring the situation. Initial estimates indicate that the global macadamia crop production in 2023 is expected to increase by 11.7%, continuing the positive trend. Over the next five years, the industry is forecasted to maintain a CAGR of 11.3%, with an estimated global supply of 500,000 metric tons by 2027.
Let’s take a look at some of the developments in key macadamia growing regions:
- South Africa: The 2023 crop is expected to reach 76,000 metric tons, reflecting an increase of 8.4%. The harvest is currently underway, and growers are cautiously optimistic about the potential total crop that will be actually harvested.
- Australia: Macadamia production in Australia is forecasted to grow by 9.5% in 2023. The harvest is underway, and there have been no major issues reported regarding crop
quality. Similar concerns on actual harvest due to lower prices.
- Kenya: Industry is expected to grow by 8.5% in 2023, ongoing slowdown in kernel sales and unsold inventories both at origins and destinations have resulted in cashflow
slowdown. The Kenyan government has opened NIS exports to boost farm-level purchases, but quality remains a key factor to watch out for.
In terms of demand, there has been increased activity in the NIS market by Chinese buyers since February 2023, indicating growing interest. Although the kernel market has been slow to pick up, the lower price point has been a factor in triggering demand. Despite challenges, the macadamia industry remains cautiously optimistic about the future, with expectations of continued growth and potential for improved pricing in the long term.
Peanut planting in the U.S. is just getting underway. As of April 24th, the USDA reports that 4% of the crop had been planted. The pace will pick up dramatically over the next few weeks, as May is always the most active time for peanut planting. As reported last month, the USDA predicts that peanut acreage in the U.S. will increase 6.7% in 2023.
The latest “Peanut Stocks & Processing Report” indicates that peanut usage by U.S. manufacturers is down 1.3% versus last year (crop year-to-date, August – March). Usage in the snack and candy segment is down, but usage in peanut butter is up 4.7%. Exports of U.S. peanuts are down 5.3% crop year-to-date versus last year. The USDA is projecting carry-out stocks of U.S. peanuts to be around 1.1 million tons at the end of July (the end of the crop year marketing period). Some speculate that final carry-out stocks might be a bit lower than this (maybe around 1 million tons), primarily due to exports being stronger than projected for the remainder of the crop year.
In the near term, getting the crop planted will be the primary focus of the industry. Favorable weather during planting and for the initial phase of the growing season is critical. The longer-term direction of the market will largely be determined by not only the ultimate production quantity of the upcoming crop, but also the quality of the crop
- The cold spell earlier in the month has perpetrated damage in smaller patches across the Black Sea region in Turkey. We can safely assume that the impact is not widespread, and the crop growth will be normal in most areas in Turkey. Most other origins have reported normal crop growth for now.
- TMO is expected to be carrying around 150,000 metric tons – and is expected to sell further only post the elections by the middle of May. The farmers/traders are expected
to be carrying around 80,000 metric ton in-shells. However, the supply of 80,000 will not be sufficient for the balance season demand, and TMO sales price will be critical for
shipments in the upcoming months.
- The prices have corrected in view of a good upcoming crop. Prices moved down from 114-115 TL/kg levels earlier in the month, now to around 110-111 TL/kg. However, we have seen firm resistance at these levels to sell. Availability of in-shells stays limited.
- The TL has been sliding against the USD and now has crossed 19,40 levels. The market expects larger volatility as the election period approaches.
- We continue to witness spot demand from mid-sized and small-sized accounts. We believe most large confectioners and retailers are now covered for Q2-Q3.
- Turkish exports for the season are 215,000 against 262,000 in the same period last year (3rd week of April) – lower by almost 20%. Though we witnessed a significant drop in
overall exports, the processed exports are expected to be stable – indicating inability of other origins to replace Turkey origin in this category.
- We have seen the largest demand drop from the mid-sized/small-sized confectionery and bakery segments. Retail and large confectionery brands have also had concerns, but
most have sourced almost equivalent to previous years. Overall, we believe that the demand has reduced in lower single digit percentage over last year.
Now that the cold spell has been seen off, we believe the crop estimate will be close to 800,000 metric tons for next season. The supply for next season looks to be more than adequate. TMO will not be able to sell all its purchases this season and will carry substantial crop into next year. It will be interesting to see TMO approaches the next season – that
should form the guidance for next season price.
Going forward, election outcome can be a major trigger, especially for the currency. Wider opinion is that the incumbent will fail to get 50% votes to win the majority outright, and we
might see a runoff. If the incumbent returns to power, we might see the sentiment drop further resulting in some more pressure on currency. In case the incumbent loses, we might
see an improvement in sentiment for some period, and thus seen as a favorable sign for the currency. However, the new economic policies can then determine the future course for the currency. Fundamentally though, we all know that the inflation and interest rates gap is too much for the currency to stay stable.