After some very hot weather last week here in California, we did have a beautiful weekend of mid 70’s to low 80’s. The weather over the next ten days calls for low 80’s and will be marching up to triple digits by next weekend. No rain is forecasted, nor is there any expectations for the next four months. From this point forward, California will be dependent on its infrastructure and ground water to carry us forward. Talks continue with the state legislature on mandates and restrictions on how to control the over-use of water by its populous. Meanwhile, the drought only worsens as we go into the driest time of the year.
It should not go understated as to how dry our state is and the conditions for which all growers of all types will face through the summer and moving forward. No one is taking anything for granted, and while we may have an estimate for a 2.8-billion-pound crop coming, most will remain cautious as to what eventually will be harvested.
With most business happening in the prior week and the shipping report coming out next Friday (6/10), the industry was quiet this week. Prices became firmer in respect to the most demanding items, while others such as Standard 5’s weakened slightly, due to a heavier supply. It is believed an over-abundance of Standards, or higher percentage of the crop, will be carried into the next crop year. Therefore, as we hear Standards weakening, this will not necessarily be tied to other almond varieties or sizes as we’ve seen in the past.
The industry is somewhat at a crossroads, as we continue to see essential external costs for growing increase since traditional, pre-pandemic times:
Fertilizer (anhydrous ammonia) increased from $500/t to $1,500/t today.
Crude oil has increased from $53/barrel to $112 today.
Natural Gas increased from $1.90/mbtu to $8.20/mbtu today.
Corn increased from $3.80/bu to $7.80/bu today.
Cotton increased from $0.70/lb. to $1.43/lb. today
Wheat increased from $5.70/bu to $11.90/bu today.
In the meantime, almond prices continue to fall, causing serious issues for growers as they are barely meeting operating costs.
Position Report: June 10, 2022
Objective Estimate: July 6, 2022
Week 23 Update
We have already seen by way of previously shared acreage reports and the nursery reports, a peaking of bearing acreage occurring and what appears to be a topping out. This will help in the years ahead to bring supply back into range of demand.
Almond prices remain a great value and therefore current demand also remains strong. This will help to bring the supply closer in-line with demand over time.
While logistics issues continue, as we have seen in the last two shipment reports, we are headed in the right direction, and it is only a matter of time for the road to smooth out.
Next week’s position report will be vital to the industry and if expectations are not met, this may lead to a sell-off by growers needing to escalate movement of the current crop prior to the arrival of the 2022/23 crop in August.
Buyers are on their heels as several other influential factors are in play as well including rising inflation throughout the global economy, strengthening dollar, and the war in Ukraine causing disruption throughout all of Europe.
Despite the great pricing, increased demand and strong shipment reports supply will remain out of sorts for the immediate future, and pressure will remain for some time to come.
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