The Tanzania crop started trading with decent demand, about 45-50% is sold so far. Initial demand was driven by the Indian market, with demand coming from the Vietnam industry in the second half of the month. Both main processing industries need the Tanzania crop to continue processing until their local crops arrives during Q1 of 2023. The Mozambique crop started trading and first loads of in-shell are expected to sail towards Asian processors by mid-December, likely arriving at Vietnam processors during their Tet break.
While we aren’t anticipating any weather patterns that would impact arrivals, it is still too early to comment in detail on the next Northern Hemisphere crops.
Kernel prices kept inching up during the month of November and are about $0.15-$0.20/pound higher versus the 15-year lows we witnessed at the beginning of the month. This is driven by the requirements of main destination markets for the next six months and increasingly favorable prices. Several end customers have started to review full 2023 needs, with some looking even further past 2023. With an overall unclear scenario on energy costs, and weaker and unpredictable local currencies, the industry looks to be ready to de-risk their cashew requirements and start covering as far as possible. On the contrary, local processors are not ready for such far forward commitments as the in-shell and kernel prices remains at disparity.
Harvest completed last month, allowing growers the month of November to clean up their orchards with trimming, general maintenance, and removal of some trees. Apart from rain earlier in the month, November turned out to be another dry month. While it is still early to know the direct implications, the drought remains of major concern for the industry.
The October position report was released by the Almond Board of California on November 11. Crop receipts now stand at 1.657 billion pounds, trailing behind last year’s receipts by 7.65% and is consistent with the objective estimate of 2.60 billion pounds. Last year, the industry harvested 2.92 billion pounds; production will be off this year. Nonpareil varieties will be down the greatest at roughly 12.5% versus a year ago, while we see the popularity of the Independence variety continue to grow again this year, up 6.9% compared to last year.
Shipments for the month were 215 million pounds which was a pleasant surprise to the industry expectations of 200 million pounds and just a 1% off from last year. Export shipments were better this month than last month, at 149 million pounds versus last month’s 137 million pounds, domestic shipments were also better than last month’s with 65.6 million pounds versus 52 million pounds. All in all, the industry stands now with 631.3 million pounds shipped just 3.19% behind last year at this time, with plenty of time in the new year to improve.
Shipments and sales continue to trail behind at approximately 38% sold of total supply, compared to the five-year average of 47% sold by this time of the crop year. This may lead to continued pricing pressure through the 2022/2023 crop season.
The Administrative Committee for Pistachios (ACP) released the October shipment report on November 15th and showed California 2022 crop receipts of 887 million pounds. This should be the final 2022 crop size and is about 25% lower than initial expectations and 24% lower than last year’s crop of 1.16 billion pounds.
This year’s carry-in was 354 million pounds, 70 million pounds larger than last year’s 284 million pounds. Considering the smaller crop and larger carry-in, total supply for 2022 crop is 1.241 billion pounds, which is 209 million pounds or 14% smaller than last year’s total supply of 1.450 billion pounds.
Most California sellers expected a larger crop this year and were lowering prices throughout the season, and, as a result, sold early to get ahead of it. This left the industry with a higher sold percentage than normal going into harvest. Combining the higher-than-normal sold percentage and a crop significantly smaller than expected, the California industry is left further sold than they are comfortable being at this time of year.
Iran’s crop is also significantly smaller this year due to frost damage, which is causing steady demand for California Pistachios from both Middle East and India buyers. As a result of the above, most sellers are currently off the market.
On the demand side, it is clear that global consumption is down across nuts, and we expect this trend to continue as long as the uncertainty around global economies persists.
We expect pricing to remain firm at least until Q1 on the back of limited selling support. Beyond that, there is potential for pricing to soften in the second half of the crop year as sellers will want to have minimal inventories on hand going into a likely larger 2023 crop.
The 2022 crop harvest is all but wrapped up in California. While the 2022 crop Objective Estimate forecasted a slightly smaller crop this year, it now appears that this year’s crop will exceed last year’s and finalize somewhere between last year’s crop of 730,000 tons and the unofficial Subjective Estimate of 790,000 tons. It is also clear that the quality of this year’s crop is significantly poorer than the last several years in terms of both color and edible yield. This leaves the California Walnut Industry facing another challenging year with the trifecta of larger supply, poorer quality, and low pricing to deal with.
An early highlight of this crop year is that the low prices we are experiencing seem to be stimulating demand. This is reflected in commitments seen at the end of October being 70,389 tons, or 47% higher than the same time last year. Also, new sales in the month of October were 138,993 tons, which is the highest we have seen in over a year and 56,808 tons larger than last October sales.
Walnut prices remain very depressed globally due to an oversupply situation at every origin, and we have not seen any upside in some time. However, it is likely that good quality light material will be hard to find by the second half of this crop year, given the poor quality of this year’s crop. Given this combined with the historically low-price levels we are seeing today, we are recommending to our buyers that any light color product be covered as soon as possible.
The 2022 peanut harvest is essentially complete and has pretty much been so for at least a couple of weeks now. As of November 27, the USDA reported the crop to be 97% harvested. All major producing states were 97%-100% complete, with only Texas still sitting at 87% harvested. What little harvesting is left will be wrapped up in short order, and the book will be closed on this harvest season. The overall quality of the crop continues to look good (low aflatoxin), but grades and yields do appear to be lower than usual particularly with the runner crop in the southeast.
The USDA elected to leave their crop estimate unchanged in November. The “official” USDA estimate continues to call for a crop of 2.885 million tons. Almost everyone in the industry still believes that this estimate is too high. As of November 30, the National Peanut Tonnage Report was showing only 2.64 million tons received and graded. Based on trends from prior years, it’s likely that small, incremental quantities will continue to be added to this report through December and even into the first couple of months of next year. That being the case, it’s still reasonable to believe that final crop receipts could still be in the range of 2.725–2.75 million tons, but it remains unlikely that we’ll reach the USDA estimate of 2.885 million tons.
Demand appears to be relatively stable at this time. We’re three months into the 2022 crop year reporting calendar (August–October) and the USDA says that edible peanut usage by U.S. manufacturers is down only about 0.5% versus the same period last year. Usage in snacks is down 6.2%, candy is down 0.5%, and peanut butter is up 2.7%. For exports, we’ve only received data through September, but total peanut exports are up slightly versus last year for the August/September time frame. From a U.S. supply/demand perspective, the “official” outlook from the USDA is, of course, based on their assumption that crop production will reach 2.885 million tons. Using their estimate, 2022 crop carryout stocks are projected to be 1.052 million tons as of July 31, 2023. This would be about 130,000 tons less than the carryout from 2021 crop. However, as stated earlier, it’s very likely that final production will be less than the USDA estimate. If we assume final crop production of 2.75 million tons, carryout stocks will end up somewhere in the range of 925,000–950,000 tons. This is still enough peanuts to bridge the gap to 2023 crop, but it does paint the picture of a balanced to somewhat tight market.
After a long period of stability and balance of demand and supply, we are now seeing signs of reducing supply in Turkey. This is mostly due to the significant tendering to the TMO and that the principal market player has bought most of their annual requirement. The TMO now has physically accepted 170K MT in-shells, and the queuing to tender stocks amounts to at least another 60-70K MT. Overall, TMO looks to be geared up to source between 200K - 250K MT for the season. The principal buyer has been reported to source around 150K in-shells and another 50K of kernels. It was expected that the market softens once the principal buyer discontinues its procurement, however this has not materialized. Due to lower availability and some spot demand coming in from European buyers, we have seen local market run up almost 10% in the last 10 days.
Turkish exports in for the season are 55K against 68K in the same period last year. This can be attributed to late crop, substitution of origins and weaker demand as well.
The TL continues to be stable around the 18,60 level. The EUR though has gained against the USD in the last few trading sessions – thus negating some of the TL price increase. We had seen renewed interest from European buyers as the EUR strengthened.
The next trigger to the market will be the total stocks TMO will be able to absorb till end of November. That will determine actual availability of material for further trade. We continue to believe USD prices are attractive for mid-longer-term coverage. The EUR strengthening too has given a boost for buying across Europe. We expect demand to be strong till mid-December; most buyers would like to close off their Q1-Q2 2023 requirements before the industry closes for Christmas and New Year holidays.
The 2022 Crop harvest has concluded in most the regions except for China where the harvest cycle is from August to November. Most regions except for Australia showed an increase in the crop number. Total crop is forecasted to be at 294K MT (+21% YOY).
South Africa was at 68.5K MT which is +4K MT than the earlier revised estimate. Kenya is at 45K MT (+3K from earlier estimates) while Australia closed at 48.8K MT (-10% YOY) due to adverse weather conditions.
The China harvest is continuing and there are reports that crop could be well over 60K MT for the season, which is nearly double from last year.
The 2023 crop outlook is looking positive with dense nut-sets seen on the trees; however, we need to watch out for the nut loss during November and December rains.
Markets continued to stay low as buyers assess their inventories; lower interest in covering forwards owning to weakening currencies. Prices for NIS also continues to hold at lower levels as processors look to reduce carry over position and their working capital as origins are nearing the final grower settlement period. The industry continues to stay long on the broken grades (S4 and below) and differential between wholes and brokens continues to stay at five-year high. Festival season in US and China is expected to kick back some demand however inflationary pressures may keep it in check.