September is all but in the books. Change is certainly in the air. Temperatures in California are moderating and the wildfires, while still burning, are closer to being controlled. However, we are not out of the woods yet. With the cooler weather bringing increased winds there is now a red flag warning. The Caldor fire presents a significant threat with 50 to 60 mile an hour winds predicted. While it is 78% contained the next few days will be critical to see if that can be maintained. In addition, there still is the Dixie Fire 94% contained, Windy Fire 4% contained, KNP Complex 8% contained, McCash Fire 48% contained, Fawn Fire 65% contained, River Complex 67% contained, Monument Fire 69% contained, and still an additional six more fires burning.
With September coming to a close, will the market start to wake up? We continue to see a stand-off of sorts between sellers and buyers, pricing of course being the major factor of contention. Shipments remain strong and sellers are in no hurry to sell lower, meanwhile buyers feel pricing has gone up too high. While the crop may be shorter, does it warrant such a large increase?
This is a valid question that can only be answered by more questions. Will the California drought continue for another year or two or more? Will some growers have to curtail their growing due to the lack of water or costs of growing? Will next year’s crop be even smaller and require a suitable carry-over to help even out the supply from one crop year to the next?
These are some of the questions being asked. Prices have risen because we believe the crop will be smaller, and particular sizes will be more difficult to manage. These supply concerns have led to the higher price levels. The industry cannot continue to sell and ship at the same rates as last year and expect to have enough almonds for everyone.
Week 40 Update:
Shipments continue to be strong regardless of transportation issues. September shipments are expected to be similar to last year’s numbers. The September shipment report will be released on October 12th. As a point of reference, last year the industry shipped 260 million pounds.
Most are looking at today’s market levels as a buying opportunity, with expectations that price levels will continue to increase the closer we get to January. While we have seen pricing come down on smaller sizes (less popular), pricing on 25/27 and higher have increased.
With the remaining varieties now being harvested it is clearer than ever that the crop will not meet the subjective estimate of 3.2 billion pounds.
The crop always gets better with time. Regardless of the initial sizing being reported, size will improve as we move through the processing of billions of pounds of almonds.
It is also a selling opportunity as much as it is a buying opportunity, even though the crop will be less than last year it is still a big crop that creates harvest holding pressure.
We should not ignore the level at which the industry is undersold. Some growers will run out of storage room and realize it is time to sell. Wake Me Up When September Ends.
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