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Almond Market Update - October 15, 2021

The first two days of the week saw strong winds come through the valley with gusts above 60 miles an hour in some areas.  While there was no precipitation in the valley, there were reports of up to 6” of snow in the northern Sierra’s.  The main fire (Caldor Fire) that caused so much damage has now been reported to be 98% contained.  However, it is still fire season as we have continued dry conditions throughout the state.  It is hard to imagine, but according to Cal Fire, there has been 2,487,887 acres burned thus far, with 7,883 wildfires reported, 3,629 structures damaged or destroyed and sadly 3 fatalities.

Tuesday the Almond Board of California released the September shipment report.  Many had expected the industry to mirror what had happened last year and ship 260 million pounds.  However, with the many shipping issues that exist locally and at the ports around the world, the industry was only able to ship 227.64 million pounds for the month of September.  This is  off -12.8% from last year.  Export shipments were off -17.2 % with 163 million pounds shipped versus last year’s 197 million pounds.  Meanwhile, domestic shipments were flat with 64 million pounds shipped, a slight improvement of 0.8 %  from the same period a year ago.  

For detailed report, please follow the link: https://www.almonds.com/sites/default/files/2021-10/2021.09_PosRpt.pdf

There are several things to look at on this report, especially concerning the committed shipments.  Last year the industry looked at the larger crop size and the continuing pandemic as a reason to sell.  As a result, we saw much lower pricing and much more willingness to sell aggressively.  Fast forward to this year we have now gone through the second year of a drought, with worsening drought conditions. This with a smaller crop being expected and uncertainty with the crop in hand has created the opposite approach in the industry.  Growers are willing to wait to see more of what they can expect from this crop as well as how the weather conditions will prevail in the months ahead.  Last year’s prices were unsustainable from a farming perspective with the cost of growing almonds continuing to increase.  

Week 42 Update:

Bullish Trends:

  1. Packers are in full production working to keep up with orders in hand to fulfill shipments through December.
  2. While the shipment report for September did not meet expectations, the industry sees this as not a demand issue, but rather a logistics issue.
  3. Domestic shipments continue to be strong and reflect more of where the market would be if not for ocean freight issues being experienced with exports.

Bearish Trends:

  1. While the logistics issue has caused shipment woes, it will have a profound result on lost sales as demand opportunities are lost and consumption disappears.
  2. Reports of heavy stock in destination markets is not a secret and the reality is that demand is not as high as maybe it should be in those export markets.
  3. Pressure is mounting on the available storage throughout California as the almond supply continues to pour in with no immediate outlet for it.  At some point growers will need to sell almonds to create space and not lose out on much needed demand.

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