The Central Valley will be expecting triple digit temperatures again this week for the next 5 days. These are unseasonably hot temperatures, well above normal for this time of the year, and will likely set records in many areas. This leads to increased stress on the orchards and of course more pressure on the water supply. There are already signs of the drought in the southernmost region of the state with some orchards being abandoned, older trees being pulled out and reverse irrigation being utilized. Reviewing the drought maps really shows significant differences from this drought compared to the 2014 drought as this is much wider spread up and down the state, not necessarily affecting one area more than the other. In other words, our state is in trouble . While the drought may have less impact on the 2021 crop, concerns over the future crops will become of consideration especially if we do not have a strong wet winter and an even better snow pack next year, something we did not have this year. It is not too early to be adding this to the calculus as it may take several winters to play catch-up at this point.
The industry has had time now to absorb last week’s shipment report. With total shipments for the year at 2,448 billion pounds and 21.4% ahead of last year, sellers are feeling very bullish. As a result, the market continues to firm this week with few offers being made. Much of this can be attributed to several factors including the drought. The carry-out, despite being +160 million pounds over last year, will be just right to bridge the gap between current crop and new crop especially for ingredient manufacturers. Additionally, despite the larger carry-out, many sizes and varieties are already a challenge to find or get offers for. Historically, when a carry-out is 20% or less of the total crop, crop prices rise the following year. Finally, many prefer to wait until the objective estimate is released on July 12th to offer new crop.
Remaining Benchmark Dates:
Next shipping report: July 9, 2021 (new crop sales will continue to be reported)
Objective Estimate: July 12, 2021
Final shipping report for the 2020 crop year: August 12, 2021
Week 24 Update:
With record shipments firmly in hand, the industry will ship over 2.8 billion pounds and finish the season over 20% ahead of last year.
Almonds remain the world’s first choice for tree nuts due to their versatility, flavor and value over all other nuts.
While shipping remains a significant issue, the industry has found a way to get it done. Supply remains a dependable asset to continued growth for the industry.
With firming market levels and possible shrinking supply for the next crop year, this could lead to prices slowing down the growth the industry has enjoyed the last few years.
This leads to less innovation and new items in the pipeline getting canceled, not the direction the industry would like to see. Unintended consequences as the saying goes.
Yes the drought is real, but look how fast it came back last time there was a drought. One winter could restore everything!