Cashews

In-shells:
The Ivory Coast crop flows is starting to slow down, which looks very early and irregular for this period of the season. We can’t straight conclude this signal to be a shortfall in the IVC crop. Still, this event needs to be closely monitored for the next couple of weeks.

The Cambodia crop pricing is at significant disparity to the spot Kernel market, and it’s still not cooling off. With local Vietnam crops not delivering sufficient larger Kernels, we do expect Kernel processors to start stepping into procurement of Cambodia very soon.

India continues to cover their WAF needs for processing. Local crops are still expected to be in line with last year, but not enough for the
booming Kernel consumption in their domestic market.

Kernels:
The focus of the industry remains covering spot and nearby shipments against their shorts to avoid pipeline disruptions. This strategy has resulted that Kernel prices start bouncing back up and in the last week, Kernal prices are up about 3%.

With RCN prices high and shell realization at less than half what it was last year, we have noticed more and more processors have started closing their factories due to disparity. These closures will eventually result in lack of Kernels in the spot market, and with the recent hand-to-mouth coverage strategy, we may see further inching-up of prices in April.

Almonds

California continued to receive heavy rain, snow and wind throughout the month of February and into March at record levels. As we stand now, with so much poor weather throughout the state and for long non-stop durations, no one knows at this time to what degree, how the 2023 crop will be impacted. As a result, many growers remain off the market or selling at a reduced pace until further information can be assessed. By this time next month, a better understanding should be available.

During March, the Almond Board of California released the “February position report”. February proved to be the strongest shipping month yet for the current crop year with 245.7 million pounds shipped, up +23% year-over-year. It also propelled the industry well ahead of last year, up +5.5% with 1.517 billion pounds now shipped year-to-date.

Crop receipts have also come almost to a stand still now, the crop is more likely to top out around 2.55 billion pounds, versus last year’s 2.9 billion pound crop. Clearly, with less almonds harvested and the questionable supply for the new crop yet to be determined, the market levels have firmed accordingly, at least for the time being.

Pistachios

The Administrative Committee for Pistachios (ACP) released the “February shipment report” on March 15th. 2022 crop receipts have finalized at 884 million pounds. Total supply for the 2022 crop year is 1.24 billion pounds, down 14% from last year’s total supply of 1.45 billion pounds. Estimated marketable inventory as of February 28th was 624 million pounds. This is down significantly versus the 859 million pounds of Estimated Marketable Inventory at the end of last Febuary, a decrease of over 27%.

The strong shipment trend for pistachios continued in February with record shipments for the month of 66.9 million pounds, up 9.5% versus February 2021. Year-to-date shipments currently stand at 432 million pounds, up 3% versus last year’s shipments of 419 million pounds as of the end of Febuary. Domestic shipments are down 6% year-to-date while export shipments are up 7% year-to-date. Export shipments are led by strong increases in the Middle East & Africa, with this region at 56 million pounds year-to-date versus 44 million pounds year-to-date last year, up 7%. This is likely due to local crop substitution as Iran’s crop was significantly lower this year due to frost.

Inshell pricing continues to remain firm as remaining availability from 2022 crop is extremely limited.

All eyes will soon point to 2023 crop potential, with the bloom period beginning in the coming weeks. Winter conditions in California were previously thought to favorable, with good chill hours and ample water supplies this year. However, recent flooding in the Tulare Lake basis is cause for concern as many pistachio trees are currently under water.

Walnuts

The CWB (California Walnuts Board) reported the final crop receipts for the 2022 crop year to be 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 the 760,000 tons we have been projecting. 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 February performed closer to expectations (-2.1% versus last year), following an above average January that was 26% higher than last year. This brings the year-to-date shipments to 3.0% ahead of last year. However, given the larger total supply, the unshipped inventory currently stands ~12.7% higher than last year.

Commitments in February are down 3% versus last year and new sales FTM were down 21% versus last February. The sold percentage of total supply stands at 65.4%, down 4.7% versus last Febuary’s sold percentage of 70.1% on total supply. This is an extremely problematic situation for the industry to be in, with a record total supply on hand and sold percentage lagging 5% behind last year.

Sale and shipments need to improve significantly in the coming months if we are to finish with a manageable carry out.

Peanuts

On Friday, March 31st, the USDA released the “2023 Prospective Plantings Report” which provides their current estimate of what planted acreage will be for various crops in 2023. The report data is based on feedback from growers who were surveyed during the first two weeks of March. Based on the data collected from those surveys, the report predicts that peanut acres in the U.S. will increase by 6.7% in 2023 versus last year. An increase in peanut acreage is needed in 2023, and at 6.7%, the estimate is pretty much in line with what many expected.

Based on the historical accuracy of the report, one thing we can be reasonably sure of is that final planted acreage will not be up 6.7%. As most of you who have been in the peanut industry for a while are aware of, the “Prospective Plantings Report” has had some big misses at times in recent years, with actual planted acres sometimes being substantially different (both higher and lower) than the initial projection. In 4 of the previous 5 years, final peanut acreage actually ended up being lower than initially predicted, sometimes by more than 7%. The exception to this was in 2020, when final planted acres were almost 9% higher than initially projected in the report. think we can all remember the spring of 2020, and how crazy things were then. Did the chaos of the times contribute to the big miss? Maybe, maybe not….because looking back beyond 5 years we see some substantial differences as well. For the most part, I think the big misses can be attributed to the fact that, in early March, growers still have time to change their minds regarding what they will plant.

It’s important to remember that, as mentioned earlier, the industry needs an increase in peanut acreage this year. The USDA still predicts that 2022 crop carryout stocks will be around 1.1 million tons, but based on recent buying activity from both Europe and China and based on continued relatively strong demand in the U.S., I don’t think it’s unreasonable at this point to think that actual carryout stocks could be closer to 1 million tons or perhaps even slightly less. This would represent a very balanced market and with total annual demand for U.S. peanuts in the 3.0 – 3.05 million ton range, we need peanut production in 2023 to be within the same range. Another 2.8 million ton crop (similar to the 2022 crop), would be problematic for the industry.

From a market perspective, the “Prospective Plantings Report” is likely a “non-event” for peanuts, at least for now. It will be important to watch competitive markets in the next few weeks, particularly cotton, for any price movement that might indirectly affect peanut acres. We need more time in order to determine if peanut acres will be substantially less than predicted, or more than predicted. We should begin to be weather watchers as well. Favorable conditions are needed for the upcoming planting season and also needed early in the growing season so that the crop gets off to the best start possible.

Macadamias

The macadamia industry is poised for another exceptional year of growth in 2023, with major origins gearing up for the harvest season. In 2022, the industry experienced a remarkable increase of over 24% in global supply, and initial estimates indicate that 2023 will continue this positive trend with an expected increase of 11.7%. Over the next five years, the industry is forecasted to maintain a remarkable Compound Annual Growth Rate (CAGR) of 11.3%, with an estimated global supply of 500,000 million tons by 2027.

Let’s take a look at some of the exciting developments in key macadamia growing regions:

South Africa achieved one of the highest growth rates in the industry at +31.5% in 2022, and the 2023 crop is expected to reach 76,000 million tons (+8.4%). The harvest is set to
start in mid-March of 2023.
Despite ongoing struggles with lower yields due to suboptimal farm practices and small holdings, Kenya registered a growth rate of +4.5% in 2022 and is expected to grow by 8.5% in 2023. The Kenyan government is looking into opening NIS exports from Kenya to boost demand and officially export NIS, with quality being the key factor to watch out for.
Australia recovered exceptionally well for the 2022 crop from an initial estimate of -10%, ultimately closing at 53,000 million tons (+2% year-over-year), and is forecasted to grow at +9.5% in 2023. The harvest is expected to start in late March, with no major issues reported, and nut sets looking exceptional on the trees.

Regarding demand, we have observed increased activity in the NIS market by Chinese buyers since February 2023. While the kernel market has been slow to pick up, the lower price point is a crucial factor in triggering demand. The industry remains optimistic about the future, though kernel grades (mostly S4 and below) are expected to stay discounted in the
short to medium run.

Hazelnuts

Supply side:

Most of Turkey experienced a cold spell last week. The freezing temperatures indeed have had some impact on the Hazelnut growing regions as well, but only in small pockets.
While the exact damage is still being ascertained, we can safely assume that the impact is not widespread, and the crop growth will be normal in most areas in Turkey.
Despite a large crop estimate of 850,000 by the black sea exporter’s association and continued weak demand, Turkey market witnessed some strengthening – supply continues
to be low, and farmers do not wish to sell their balance inventories. Trades are being concluded around 114-115 TL/kg. In-shell availability remains constrained thus limiting any downside to the prices.
The TL has been slightly weak and has crossed the 19,25 TL/$ mark. The market expects larger volatility as the election period approaches.

Demand side:

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 in for the season are 197,000 against 242,000 in the same period last year (4th week of March) – 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, too, have had concerns, but most have sourced almost equivalent to previous years. Overall, we believe that the demand has reduced in lower single digit % over last year.

Our View:
Now that the cold spell has been seen off, we believe the crop estimate will be close to 800,000 million tons for next season. The supply for next season looks to be more than adequate. We though see a limited downside in a short term due to low availability with farmers. 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’s price.