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Almond Market Update - April 9, 2021

California saw another blissful week of weather with temperatures running in the mid-70’s and hitting 80 degrees in some areas.  While temperatures do drop to the mid-40’s at night, once the sun comes up we are experiencing beautiful spring-like days.  Unfortunately, the weather remains dry with no forecast for rain in site. We expect to see high 70’s to low 80’s next week running about 10 degrees above normal for this time of the year.  

As stated last week, we are in the beginning of a drought year and the state of California is taking measures to mitigate excessive water use. Restrictions for homeowners have already been put into place for watering lawns, etc.  Reports of water costs are soaring for growers in specific regions reaching as high as $1,500 / acre feet.  This will result in alternative well water being used if possible.  However, in many cases due to the last drought and low aquifers this is not ideal as water quality is an issue with high sulfite levels, which then requires other water treatments that comes at a price.  We should appreciate what the growers must go through and not discount the amount of effort and cost that goes into growing.

Today the Almond Board of California released the March Shipment report.   The industry shipped an astounding 266.65 million pounds last month.  This is 28% ahead of last March. This makes it the third largest shipping month in history, a record that seems destined to be broken.  The shipments for the month far exceeded most expectations considering the constraints at the ports and lack of containers and ships available.   This brings the industry to 17.7% ahead of last year’s shipments year to date.

With all the excitement of the report, disappointingly the domestic shipments are off -10.6% with 71.3 million pounds shipped versus last year’s 79.7 million pounds. It is important to note that we were experiencing “pantry hoarding” in the US at this time last year due to COVID-19 concerns, which led to larger domestic shipments in both March and April. Meanwhile, shipments for March were really driven by export volumes with 195 million pounds shipped, +52% over last March's shipments.  This puts export shipments 23.8% ahead of the same time last year.

The next important dates to note:

Acreage report: April 22, 2021
Subjective Estimate: May 12, 2021
Objective Estimate: July 12, 2021

Week 14 Update:

Bullish Trends:

  1. March shipments were beyond expectations and shipments should continue to improve as the port congestion subsides and containers become more available.
  2. Pricing remains very good, while we will most likely see a firming trend following this report, it is still in the lower quadrant of pricing compared to the historical time line.
  3. Consumption continues to grow strong throughout the world as evidenced in today’s strong export report.  China is up +59% over last year to date, while India is up +51%.  Meanwhile the EU is up +14% and ME is up +10% over the previous year.

Bearish Trends:

  1. Shipping issues continue to slowdown the export shipments, although not evident in today’s report.  One could only wonder what the number could have been under different circumstances.
  2. Domestic shipments are a concern as this is a critical piece to meeting the numbers for the year so desperately needed.  As we roll into the summer months, this could be the beginning of a trend downward.
  3. With the crop receipts firmly at 3.1 billion pounds, the supply has grown faster than demand.  All eyes will turn to the upcoming subjective estimate next month.

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