Almond Market Update - February 25, 2022

Unsettled weather made its way into California this week. We saw the coldest temperatures thus far, with some of the growing areas dipping into the low 20's. There was also widespread, fast-paced moving rain and hail events that occurred on Tuesday and Wednesday throughout the valley. Many concerned growers have pulled off the market due to potential damage to the orchards in the aftermath of the bloom. It will be several weeks before we can fully understand what damage, if any, occurred. 

Following the Almond Board of California's release of the January Shipment Report, export shipments were a disappointing 110 million pounds for the month, down 18% compared to a year ago. This brings export shipments for the year to 876 million pounds, down 22% overall YOY. 

With 177 million pounds shipped versus a year ago at 194 million pounds, the industry now trends 16% behind last year in shipments, with 1.239 billion pounds shipped YTD, versus 1.478 billion pounds YAGO. While demand remains strong, shipping issues will continue for the foreseeable future. 

If it weren't for domestic shipments, there wouldn't be much to get excited about. With the great values to be found and available inventories, we continue to see positive results. January shipments were 66.57 million pounds, up 13.3% over last year's January time period. This brings us flat to last year. 

California continues to face a drought with February coming to an end without delivering any significant rain or snow in the Sierras. This will result in a great deal of pressure on farmers forced to irrigate now, when normally they would be dependent on rain to deliver the much-needed ground water for the growing season. Are you wondering if this has an effect on current supply? Absolutely. However, the industry will take this into account as future crop sizes may diminish in size. Only time will tell how the upcoming crop years are impacted, but it is an inevitable reality.

We cannot emphasize enough the increases in costs associated with growing and processing almonds. We have seen these numbers skyrocket, similar to the rest of the manufacturing industry throughout the country. We expect growers to resist any further reduction in prices than what we have already experienced. 

Upcoming Milestones:

Shipment Report: March 11, 2022
NASS Acreage Report: April 21, 2022
Subjective Estimate: May 11, 2022
Objective Estimate: July 6, 2022
 

Week 9 Update

Bullish Trends

• Domestic sales remain strong this season as pricing is at another historical low and represents great value to consumers with the costs passed down the line.
• Market activity has increased. More and more buyers view these new levels as a great time to take coverage and assure they receive their products in time, especially with pressure put on production due to increased sales activity.
• The increased market activity has also led to perceived shortages on specific varieties and sizes, namely Nonpareil. With that being said, there are alternative varieties that can be substituted and used to meet those needs.

Bearish Trends

• Export shipments will remain a drag on the almond industry for many months ahead. This leads to an increased pressure to move the 21/22 crop, or be forced to carry even more into the next year's crop, adding to an already overwhelmed shortage issue for the industry.
• With all the market issues at hand, the idea that a little storm event and cold snap would cause growers to pull off the market this week feels a little contrived to say the least. While the cold weather may influence the new crop, there is too much work to be done on this crop, and time is against us.
• We had ideal bloom weather at the beginning of the month, leading up to this past week. There was plenty of bee activity each day. Pedal fall was already evident throughout the growing area and trees are now pushing leaves. We will have a crop.

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