Almond Market Update - September 7, 2021

September is upon us, and while we saw a slight change in the weather with more mild and cooler conditions, it was a brief reprieve. Temperatures have spiked again and remain in +100 degrees up and down the state for the next 5 days, unseasonably hot dry conditions.

Up to this point, our fire conditions have not improved as the Caldor fire (California’s Ida) continues to push its way closer to South Lake Tahoe.  Having already destroyed over 714 homes and 18 commercial structures, the 216,646 acre fire is 49% contained after 22 days of burning.  The air quality in the surrounding area has a AQI rating of 500 which is considered Hazardous.  As a comparison Maui is at an AQI of 16.  If only Hawaii would have us!  Winds are expected to die down in the next few days which will most likely worsen the smoke conditions but allow the firefighters some time to establish a new fire head.

Meanwhile the almond harvest remains at full strength as the huller / shellers continue to process and get the kernels shipped to the manufacturing processors. 

We continue to see the kernel sizes significantly off from last year, which puts them off even further from the historical average.  Thus far 30/32 has been about the average being reported throughout the state.  There is still plenty of time for this to improve as more and more crop is harvested each day.  The pollinizers are next up to be harvested once the early varieties are off the orchard floor.  The crop is coming in quicker now as there is not much down time between varieties due to hotter weather this summer. 

Flexibility is going to be the key word this year, as larger sizes may just not be readily available with Nonpareil.  Some varieties such as the Carmel Type and Independence may have larger kernels for those that are dead set on 20/22’s or larger.  The Independence variety is now almost 8% of the crop and continues to grow in popularity for its Bee Friendly attributes (not requiring bees to pollinate it).  Feel free to reach out for more information about Olam's bee friendly practices.

Week 37 Update:

Bullish Trends:

1. The realization of the California drought and a smaller crop than the previous year is widely being accepted now. 
2. The current market levels still represent a value over where pricing was for most of the last decade, prior to 2020's 3.1 billion pound bumper crop.
3. With the crop expecting to be off by as much as 300 million pounds this year, and no understanding of the extent of the drought in relationship to next year’s crop, one might think continued pressure could remain through 2022. 

Bearish Trends:

1. There is still a very good chance for this year’s crop to improve and grow in size from the initial data as the pollinizers begin to be harvested.
2. With cooling temperatures coming, winter is on the way.  With a strong winter the situation could be corrected soon.
3. Higher prices may lead to a slow down in demand if the industry is not careful.  With a 600 million pound carry-over and 2.8 billion pounds being harvested, the total supply is only 100 million pounds lower than last season.  The industry really doesn’t care for large carry-overs anyway.

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