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Almond Market Update - April 29, 2022

April turned out to be the wettest month we’ve had this year. In fact, there was more rain and snowfall in April than we had the first three months of the year combined. Despite April’s last-ditch effort to overcome an otherwise lackluster wet season, the snowpack remains only at 38% of its annual average. Of the state’s more than 1,500 reservoirs, 50% are lower than they should be for this time of the year, according to Jay Lund, co-director of the Center for Watershed Sciences at the University of California-Davis. Reflecting on the snowpack, anywhere from 30% to 50% of the state’s water relies on this as a supply source. There is no additional water coming to the reservoirs at this point in the season. 

Southern California has declared a water shortage emergency, highly restricting outdoor watering, car washing etc. This is one of many measures being taken throughout the state, and we will continue to see greater restrictions in the future. The state’s governor asked residents to commit to a voluntary 15% reduction in water usage, however, California resident water usage increased by 2.6% in the same time-period in 2020…enough said.

The almond market was relatively quiet this week mainly due to remaining stock availability, mostly consisting of pollinizers and SSR grades. With limited supply of Nonpareil EX#1 and larger sizes, we continue to see the pricing gap grow between the two. Even supreme grades are increasingly more difficult to find each day.

The USDA released the initial acreage report for the upcoming 2022 crop. The primary bearing acreage is estimated at 1.37 million acres versus last year’s 1.32 million acres. This is a modest increase from what we have seen over the last five years and signals a slow-down in overall supply growth. This is made even more evident by the recent nursery sales report, also released by the USDA:

Nursey sales in 2021 were approximately 41,000 acres, down from 66,000 last year. Only 24,000 acres were destined for new orchards, down from 36,000 last year, with the remaining balance replacing old orchards.

Upcoming Milestones:

Shipment Report: May 11, 2022
NASS Acreage Report: April 28, 2022
Subjective Estimate: May 12, 2022
Objective Estimate: July 8, 2022

Week 18 Update

Bullish Trends:

  1. The key takeaway from the NASS report indicates a slow-down in new plantings and an increase in bearing acreage. This will help to bring back balance between supply and demand.
  2. On top of the NASS report, Land IQ shows over 59,000 acres removed, which brings their estimate of bearing acreage down to 1.34 million, only 20,000 acres different from the 2021 crop. 
  3. With supply of Nonpareil becoming increasingly tighter, we see additional pressure on other varieties being used to substitute for the harder to find large sized Nonpareils, leading to a firming trend more palatable to growers and suppliers.

Bearish Trends:

  1. The EU is growing increasingly quiet, as there is hesitation due to the war in Ukraine, and how this will impact their economies.  
  2. Export shipments continue to be a costly impact to the industry as suppliers work for space on transport ships.
  3. With a 900 million pound carry-out and expectations for the new crop being approximately 2.9 billion pounds, we are on track to have an increased supply of 8% over the current crop year.

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