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Almond Market Update - September 1, 2022

This will be one of the hottest harvests I can remember. We’re moving from a hot August to an even hotter September, with temperatures reaching the mid 100’s to over 110 degrees this weekend and even higher in the southland. I have a feeling Pismo Beach will be overrun this weekend! Yes, the earth is dry. It does not matter what time of the day the harvest is being conducted, large dust clouds loom over the orchards. The industry restricts harvesting for this very reason to early mornings and usually concluding the day’s work by noon or the hottest time of the day.

It is still early in the harvest, but enough has transpired to be able to speak to smaller kernel sizes being received and tonnage from the same acres this year being off from the same orchards last year. Everyone driving through the orchards will comment on the condition of the trees. They are highly stressed, and it will be critical to harvest as quickly as possible so irrigation can begin for the vital nutrition needed prior to winter setting in.  

The market remained very quiet this week as buyers may be waiting to configure their approach to assure the best buying opportunity, while overlaying what their future demand could be during an inflationary market filled with whatever surprises lurk around the next corner. It is fair to say there is a mixed bag out there with some well-booked with current crop, demand weakening, and the reassurance that there is plenty of almonds to be had as the industry carries in the largest carry-out of approximately 838 million pounds in its long history.

As a recap to last week’s letter, July concluded the 2021-2022 crop year. The industry harvested 2.922 billion pounds and finished the season shipping 2.634 billion pounds or -9.12% YOY. A much different result from last year’s (2020-2021) record 3.1-billion-pound crop where the industry shipped 2.898 billion pounds. Many would like to contribute this to worldwide shipping issues that we continue to see today, but it may be deeper than that and multifaceted. Coming out of the pandemic, and into inflationary pressures, consumer purchasing patterns may be adjusting; only time will tell.

One thing is for sure: the almond industry is not contributing to inflation. Almonds remain very stable. This should be reassuring to manufacturers and retailers. Nevertheless, Neilson shows us that retail prices have increased, no doubt due to other forces such as wages, fuel prices, and simply the cost of doing business. Hopefully, this will lead to heavier promotions in the future drawing in consumers and increasing consumption.

 

Upcoming Milestones:

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

Week 36 Update

Bullish Trends:

  1. Yes, it is a large carry-out. Despite this, it consists mainly of the less than desirable sizes and varieties that lend themselves more to the manufacturing segment. New crop purchases will be strong once harvest has concluded.
  2. We know the new crop will be smaller than last year’s crop and even smaller than that of the year before. Point being the supply is getting into balance with the demand.
  3. New product development remains vigorous. As plant-based alternatives continue to grow and sustainability becomes more important than ever, almonds will be the first choice on the decision tree.

Bearish Trends:

  1. The market is muddy as prices are inconsistent from one packer to the next board depending on the processor/grower position, leading to some confusion out there.  
  2. It will take time for the market to settle into a position of confidence. This may only happen once the carry-out has dissipated or at least under control.
  3. The results of what has been harvested thus far should not be a surprise to anyone, as it is the same year after year regardless of drought or no drought. Let’s see where we are at in November!

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