Almond Market Update - August 25, 2022

By: Richard Andonian

California continues to have an extended heatwave with temperatures throughout the growing regions in the mid-90’s in the north to mid-100’s in the south. No precipitation is expected in the 10-day forecast, as the harvest is fully under way in all regions now. Initial findings are showing yields are off in many areas of the state. Nonpareil is the first variety to be harvested most and is showing no significant volumes at this time.  

July concluded the 21/22 crop year. To recap, the almond industry harvested 2.922 billion pounds and finished the season shipping 2.634 billion pounds or -9.12% YOY. This fell short of last year’s (20/21) record 3.1-billion-pound crop where the industry shipped 2.898 billion pounds. It’s important to remember where we have come from and the progress the industry has made in a relatively short time; the 19/20 crop was a 2.5-billion-pound crop and the industry shipped 2.372 billion pounds. Currently, it appears crop production will continue to take a step back.

Despite industry efforts, logistics issues continued throughout the crop year. Ultimately, port slowdowns, a lack of equipment and economic conditions led to a carry-out of an unprecedented 838 million pounds. The industry also remains undersold for new crop at about 11% (assuming a 2.6-billion-pound crop), in comparison to a year ago, the position would be much closer to 15%, which would be considered average. 

Nevertheless, the growers are by no means panicking and with historically low prices, most feel the bottom has been met. With harvest less than inspiring thus far, there is no rush in selling new crop until more is known, not only of the Nonpareil, but of all the other varieties which are still a few weeks away from being harvested as well. 

Anyone that has been around the almond business knows the resiliency of the industry and that it finds its direction. Already, the new crop is expected to be lower in production from the high of 3.1 billion pounds in 20/21, to 2.92 billion pounds in 21/22, to now an estimate of 2.6 billion pounds for 22/23. If this holds true, we will see a better balance of supply to demand before this crop year is completed.

Upcoming Milestones:

• Position Report: September 9, 2022
• Position Report: October 11, 2022

Week 35 Update

Bullish Trends:

1. Despite a large carry-out we are already seeing some sizes and varieties increasingly hard to find. This will lead to new crop sales and firming market levels.
2. The news of nonpareil harvest showing the signs of stress from the drought and possibly the freeze during the February bloom has also firmed market levels. 
3. In the meantime, ingredient sales continue to grow and strengthen as we sell into the new crop year. Much of the carry-out stock will find its way into the ingredient stream.

Bearish Trends:

1. There is only so much that can be done with the type of material left in the carry-out. This will be sold at low margins as standards most likely.
2. There is no quick fix for exchange rates or inflationary pressures we are experiencing throughout major markets. Demand is slow to come back, especially at the consumer level, where retailers have neglected to reflect the true market values of almonds.
3. The beginning of the harvest usually reflects the worst of the crop, it may be too early to be calling the crop down just yet.

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