Regarding inshells, West-Africa harvest is essentially complete, with only Benin and Guinea Bissau crops continuing to drip in. Overall yield is in line with last year. Some areas had been severely impacted by rainfall during harvest season, but thankfully Ivory Coast harvest closed these gaps. Regarding quality, we foresee this season to be poor, as quality dropped much faster than in earlier seasons. Shipping challenges remain as majority of the ports have ongoing congestions and there are shortages in availability of food grade containers.

Asia crops are well below earlier forecasts. Vietnam is 15% short, India has in some areas up to 40% shortages and Cambodia didn’t meet earlier forecasts at all. We foresee that India and Vietnam processors will continue to cover inshells from African exporters as next available crops from the southern hemisphere will not be available locally before November and December of this year.

Regarding kernels, with inflation higher in main destination markets such as the U.S. and Europe, signals of lesser consumption during Q2 are coming in. It remains to be seen if consumers with lower purchasing power will continue with their Covid-19 habits; go out less and continue to snack healthy at home.

The India local market continued to take kernels in healthy pace during the month and the Middle-East market got activated again for their Eid requirements.

Kernels continue to trade well below replacement costs. Looking at the cost of production and inshell prices, kernel prices are most likely to move north, and the downside from here looks limited.

May was a busy month for the almond industry. The industry shipped 245 million pounds for the second straight month signaling the industry may have unlocked the mystery to successfully exporting stocks. Less of a mystery and more of a harsh reality check that paying ten times the cost for a container will lead to increased exported stocks. The industry is feeling more confident now and the May shipment report is expected to be just as strong, or even better. This could bring the carry-out to a more manageable supply range of 830 to 860 million pounds if the industry continues this track for June and July.

Additionally, NASS released the subjective estimate for the 2022-2023 crop at 2.80 billion pounds. This has been backed up by additional third parties as well and appears to be the consensus of the industry. This would be off from the current crop by 100 million pounds and, as mentioned earlier, just another factor to bring back the balance between supply to demand. Demand, which has only been slowed down by logistical issues due to shipment delays, may continue to be a long-term factor that will have to be contended with for many months to come.

Market levels remain a great value and continue to be at historically low levels despite rising costs to grow. At some point, there will need to be some type of correction. Whether that means prices increase, supply continues to decrease (less plantings, less acreage harvested etc.), or growth in the industry with improved logistics and a free market.

The pistachio market remains firm, driven by continued strong demand from export markets and limited selling support. At the INC Conference in Dubai, it was revealed that both U.S. and Iran are expecting smaller crops than last year. This announcement, combined with most Independent U.S. sellers being very well sold on 2021 crop, has led to a sharp price increase over recent weeks. Current crop Inshell Extra 21/27 has moved from $3.50 to $3.70+ over the last month, with new crop pricing also increasing accordingly. However, new crop is still trading at a $0.10-$0.15 discount to current crop. We expect the market to remain firm at least until early July, when the next round of crop checking will happen in California post nut fill.

With the recent price increase on both current and new crop, it is now unlikely that we see 2022 crop pricing open lower. As many sales will be placed into China between now and new crop due to the early Chinese New Year, sellers will not want to open at a lower price than recently concluded contracts. A similar scenario occurred last year and led to a sloppy market early in the crop year.

April shipments were a significant improvement over the last six months, with shipments being up versus last year for the first time since September, and up double digits at 10.1%. This is certainly another step in the right direction as the industry continues to chip away at the carry out number, with our current carry out projection being around 125k tons. It is worth noting that 97.5% of the 2021 crop and 85.8% of total supply is already sold. However, the challenge for the industry will be to ship as much as possible over the last four months of this crop year to end up with a manageable carry out. We are forecasting shipments over the last four months (May-Aug) to be 15% higher than last year, which we believe is very attainable.

Chile is still enjoying a price premium over California, and other origins and seems to be moving through their crop efficiently, as demand for their higher quality product is strong. It was announced during the “Walnuts Roundtable” at the INC Conference in Dubai, that the global supply for walnuts is forecasted to increase substantially in 2022, by as much 440k MTs or 18%. This is driven mostly by a large crop in China.

With global supply increasing at all the major origins, the modus operandi remains the same for the California walnut industry: sell and ship as many walnuts as possible.

With several large origins for walnuts, it will take some time for supply and demand to balance out. However, we are starting to see the California agriculture landscape littered with walnut trees being removed in their prime.

While the growth in supply should keep upside pricing potential limited in the near term, we also expected limited downside as prices are already at historical lows. With this stability in price expected for the foreseeable future, it is a great time to invest in new product development, and innovation for walnut-based products.

The latest USDA Crop Progress Report indicates that 47% of the U.S. peanut crop was planted as of May 15th. From the standpoint of progress, that’s about right in line with the five-year average for this time of the season. It seems the obvious question at this point: 47% planted of how many total acres? In March, the USDA Planting Intentions Report indicated that 2022 crop peanut acres would be down only 0.9% versus last year. However, as cotton futures have continued an impressive upward march on the price charts, most seem convinced that some acres that were originally intended for peanuts will now instead be planted in cotton. A national reduction in peanut acres of at least 5% seems to be commonplace opinion now, with some thinking the reduction could be as high as 8% -10%. The USDA will publish the Acreage Report in mid-June, but even at that time we still won’t have complete certainty. Weather permitting, planting will continue over the next few weeks.

From a demand standpoint, usage by U.S. manufacturers is up 0.6% versus last year (crop year to date). This is primarily attributed to the continued strong performance of the confectionery segment, where peanut usage is up 17% versus last year. The other major segments, snacking and peanut butter, are showing a decline in usage for the same period. U.S. peanut exports are down about 22% versus last year, almost exclusively due to lack of shipments to China, where shipments are down over 70% versus last year. The story for U.S. exports in several other major markets (Mexico, Canada, EU) is positive, as shipments to each of these markets are up versus last year. In the latest WASDE, the USDA lowered their forecast for U.S. exports again, and now they have the carryout of U.S. peanuts at 1.166 million farmer stock tons. It won’t be surprising if further adjustments are made in the coming months, which would increase the carryout to near or slightly more than 1.2 million farmer stock tons.

Just as there are uncertainties in the U.S. with the upcoming crop, challenges and uncertainties also exists in other major peanut producing origins. Argentina is in the middle of their harvest, and production is expected to be down at least 16% versus last year; fewer harvested acres and lower yields versus last year. The impacts on the quality of the crop from the summer drought and late season frost is not yet fully known. There is already speculation that plantings for the 2023 crop will be less than this year. In Brazil, peanut production appears to be up in 2022, but there are aflatoxin concerns, which could limit marketing of edible kernels to certain markets. Brazil is currently faced with several challenges, and the current thinking is that there will be a decline in their peanut acres in 2023 as well. In China, there are questions regarding how many peanuts will be planted this year. Almost everyone in the industry feels that acres will be down versus last year, but there’s a wide range in estimates of exactly how much

With all the uncertainties mentioned above in play, the USDA/WASDE attempted to project supply and demand for the 2022-2023 marketing year. The report shows an increase in China acreage and production versus prior year. It also has an extremely aggressive yield on the U.S. crop (4,153 lbs. per acre), and a harvested acreage decline in the U.S. of only 2.4%.

The global crop projections presented are, for the most part, in line with the market expectations. The Turkish crop is expected to be around 760K; lower than last year but is still well-covered by an increase in crop sizes in other origins, especially in Italy.

For the current crop, the TMO has sold its second tranche of 20K MT at 41 TL/kg inshells. The estimated crop with TMO is around 20-25K. The crop in the hands of the farmers/Manavs and crackers is expected to be another 50-60K. Overall, crop carry into the next season (including already sold stocks) is close to 100K MT inshells.

The TL rout continues, and that the TMO sale prices have created a ceiling to the local market for now, prices in USD/EUR terms are now attractive for Q3 coverage. However, for the new crop, the TMO is expected to increase the price to compensate inflation. The price increase announced for tea, which is another important crop in the Black Sea region is 75%. With similar calculation, TMO is expected to declare a price of 46-47 TL/kg inshells, which is at least a 10% increase over current levels. However, the currency will continue to play an extremely important role in determining the levels at which new crop will be available for the market.

The exports this year are notably higher than the last year (290K against 230K last year similar period), but we believe it has do more with replacement of the Italian short crop and inventory buildup in Europe, rather than a significant increase in demand. We continue to experience demand on a short-term basis. Many tenders for new crop are expected during the July-September period. Until then, we do not expect large scale demand. Ferrero, too, seems to have covered its season demand, and might not participate for the rest of the season.

We expect adequate supply for the next crop. Demand continues to be stable despite war worries and inflationary woes. We have not seen a slow-down in call-offs yet. The next year pricing will now depend largely on TMO prices and subsequently on how Ferrero operates. However, the currency will continue to play an extremely important role.

As a result of recent flooding and severe weather in Australia, the crop estimate was recently revised, and has been reduced by 10% compared to earlier projections. The new estimate now is 49.3KMT against 51.5KMT last year. There are words that kernel recovery has also been impacted by the severe weather and as a result will impact the availability of kernels in the market. New South Wales and Queensland are the hardest hit areas, while Bundaberg remains unaffected.

Macadamias South Africa’s (SAMAC’s) current projection for their 2022 crop stands at 57.7KMT, 8% higher than 2021, with some estimations also hinting towards a crop of 60KMT this year. SKR this year is also expected to recover from the cycle of setbacks in the last two years. Harvest has already started and the first NIS shipments from South Africa can be expected this month.

Kenya crop numbers are expected to increase by 4% at 41.5KMT compared to 39.7KMT last year. Quality remains discounted compared to other origins. Kernel shipments out of Kenya already started in April, however there are concerns over a high percentage of immature nuts.

Disruption in sales caused by the economic lock-downs across the world has left large inventories of smaller kernel styles, which are typically the baking and confectionery grades. Price gap between the wholes and smaller styles have widened. Yes, lower pricing in the smaller styles will assist in creating demand, but it will take time as more new product developers start to adopt these. Price for S1L ranges today between 8.90-9.10/pound and for lower style S4L between 6.75-7.20/pound.