Almond Market Update - September 23, 2021

The weather throughout California has remained hot and dry this week.  There is little in the forecast that shows anything differently for the next 7 days as the drought persists.  With the change in wind direction the air quality has once again become poor here in the central valley as the fires in the Sierras continue to burn.  Thankfully, the main route connecting Sacramento to Lake Tahoe Southshore has finally been opened.  Hopefully, this trend of getting some fires under control will continue. 

As reported last week, August shipments set another monthly record with over 14 million pounds ahead of last August, a 7.4% increase.  Export shipments continue to dominate with a 10.8% increase ahead of last year, while domestic shipments grew a modest 1% from the previous year.  With the continued restrictions the industry faces from shipping challenges, it is a remarkable accomplishment in and of itself.

Notably, there is continued restraint from the growers as we see commitments lower than last year’s levels by roughly 339 million pounds.  The industry believing that the total crop size will be these pounds less if not more than last year. Early harvest indications are also showing us a crop with kernel sizes predictably smaller (through the NASS objective estimate) as well.  It is continuing to look as though the objective estimate may be more accurate than the subjective was.

Week 39 Update:

Bullish Trends:

1. Despite our struggles with logistical challenges, demand remains high.  Considering the record shipments the industry made last year, this shows increased consumption and increasing market penetration.
2. Higher price levels have come from increased demand/lower supply and have stabilized, while remaining lower than what we have seen historically.
3. It is still early in the crop year, but continued indications are that later harvested yields will not be enough bring the crop size up from poor early yields.

Bearish Trends:

1. There is still time to go in this crop year, and we have seen crops get better as the harvest continues.  This includes a possibility that more processing of later varieties will help bring in larger size kernels.
2. Lagging commitments may lead to more selling pressure if the crop suddenly comes in over expectations.
3. If we have a strong unpredictable winter, concerns on the 2022 crop will be eased, thus creating a buying opportunity so many continue to wait for.

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