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Almonds Update:

August 2010

Although European shipments continue to lag last years levels (down 31%),
strong shipments to Dubai (up 220% at 5.2 million pounds) and China (up
92% at 5.0 million pounds) have helped bring the July shipment total to
112.1 million pounds. This compares to 121.1 million pounds last July.
Strong inshell interest is reflected in end-of-season shipments to China
and India totaling about 9.0 million pounds kernel basis.

Encouraged by the sharp drop in prices a month ago, buying interested has
been brisk and there have been enough sellers to make an active market.
Commitments were reported at 167.2 million pounds, little changed from
last month and indicating new sales of 114.1 million pounds in July.

Prices fell sharply following last month's double whammy of a 2010 crop
forecast at 1650 million pounds and disappointing June shipments. A few
observations of what is being reported; Their appears to be a lack of real
standards causing tightness and small premiums for sized SSR pollinators,
current crop NP kernels continue to be available and discounted to new
crop levels, and new crop NP size 25/27 and 27/30 remain offered at
premiums due to concern with size.

California can feel quite satisfied with the price progression of the past
month. The recovery has been quicker than anticipated. Prices are almost
back to where they were before the crop forecast, which remains unchanged
at 1650 million pounds and will be the number the market has to deal with
until November or December. Today's shipment number changes the overall
supply outlook by about 10 million pounds. California still needs to
increase shipments by 7% to 10% to take care of the additional supply.
August shipments will not be helped by a harvest that is about a week to
10 days later than last year. Shipments in September and October will be
critical if momentum is to be continued.

The next few weeks will be the time to watch.

July 2010

Update July 12, 2010

The As we reported last week, Thursday the NASS objective forecast came in much higher than expected at 1650 million pounds and Friday the June shipment number of 97.8 million pounds does little to lighten the mood of Almond sellers in California.

Last June, spurred by low prices and pent up demand in Europe, California shipped 118.4 million pounds. This June, European shipments are off by 44% and decent performances in the domestic and Asian markets, particularly India, were unable to make a significant dent in the shortfall.

Until the figures of the past couple of days the almond market seemed to finding levels that were working for both buyers and sellers as inquires as well as Trading has picked up quite a bit. The commitment numbers suggest sales of about 94 million pounds, much busier than in May when sales almost came to a standstill. Driven by good demand and shrinking supply of small kernels, standards had firmed by about 10 cents by the first week of July. Good interest from India and China was seen for inshell and as inshell offers ran out kernels were being bought quite actively.

The NASS crop number will be the main factor over the next months. Until they have better information there is no arguing with it. NASS has been relatively accurate in the past. 1650 million pounds of fresh crop plus a carry over that looks now to be about 320 million pounds will mean a total supply near 1925 million pounds (after adjusting loss).

Shipments for the 2009 season are currently up just over 7% over 2008. The compounded annual growth rate since 1999 is at 7.5%. California would not sustain be able to carry-over 465 million pounds. Big crops are now normal and almonds continue to need to be sold and consumed. A 10% growth rate next season is attainable, but some help from lower prices will be needed. Prices will adjust to levels that will attract strong demand from price sensitive buyers, shipments will react positively and prices will firm as demand levels are confirmed.

Stay tuned.

Objective Estimate Released July 8, 2010

The Objective almond forecast for the 2010 crop is set at 1650 million pounds. This is up from the Subjective estimate which in early May put the
crop at 1530 million pounds. Nonpareil is forecast at 640 million pounds, up from last year's actual result of 545 million pounds. NASS cited cool
weather conditions as contributing to the crop developing well and with lower than usual insect pressure. Both nut set per tree and average kernel
size (weight) was up versus last season.

Most would now expect prices to soften on this news as up to this point expectations seemed to be centered around the 1500 million pound mark.

Tomorrow brings the June shipment report and will certainly give a clearer picture as to where prices are.

May 2010 Update

May Almond Shipment Numbers were released today.  Domestic shipments are up nearly 19% to 39.6 million pounds in May versus 33.0 million a year ago.  Exports, however, totaled 52.7 million pounds versus 86.3 million last May (down nearly 39%).    At a combined total of 91.9 million pounds shipments are down 23% from 119.4 million in May 2009.  A lower number had been anticipated, but most guess that this is going to disappoint. 

Starting the new crop at lower prices should encourage a return of strong buying seen at the beginning of last season.   Almonds are already a relative bargain compared to other tree nuts and once confidence returns to the market we would anticipate buyers will return with healthy appetites and for the market to turn upward once again..

May 2010

April 2010

March 2010

February 2010

January 2010

December 2009

November 2009

October 2009

September 2009

August 2009

End July 2009

July 2009

June 2009

California May almond shipments were expected to be huge, and the number reported yesterday was 119.3 million pounds. This is 34.9% higher than shipments of 88.4 million pounds in May last year and boosts the cumulative season-to-date total to 1149.8 million pounds. Season –to-date shipments are now up 8.6% increase versus a year ago. Continued weakness is seen in the European markets, while Middle East, Asia and North Africa are taking advantage of relatively cheap prices.

On the flip side, commitments showed a big drop from last month, shedding about 80 million pounds to 280.5 million. This is not surprising given the quiet market over the past few weeks. From the commitment and shipment numbers May sales can be inferred at 38 million pounds, the lowest monthly level in about two years.

Dampened enthusiasm stems mainly from the NASS Subjective survey, which suggests a 2009 crop of 1.45 billion pounds. Following this announcement in early May, buyer confidence, which had picked up in April, disappeared quickly.

Weakness is mostly reflected in the heavily available standard 5% market, which has now shrunk back below $1.00 per lb. If some second-hand traders are to be believed, standards are now 90 to 95 cents. The larger California’s have been dragged lower as well, but not to the same extent. Nonpareils appear to be hanging in, but also amidst muted activity.

Strong shipments will eventually lift this market. The long-term fundamentals are bullish; cheap prices both historically and versus other nuts, consumption growth in the midst of a world recession, production increases starting to level off – the same old arguments that California has been reeling off for some time. For now, however, despite the record May shipment, the California Almond industry needs to get the uncertainty of the Objective Estimate behind them before buyers can be convinced that a drop to even lower levels is not imminent.

May 2009

Almond Shipments are showing a definite trend. February was up 35.5%, March jumped 16.7% and now April shipments are reported up 16.9% at 111.8 million pounds. Season-to-date shipments are now at 1030.4 million pounds, ahead of last year's pace by 6.2%. This is a remarkable change from the end of January when shipments were actually lagging behind previous season's levels. In addition to strong shipments, commitments at 361.4 million pounds indicate very strong sales in April of about 131.5 million pounds. April has not seen this kind of activity before. For comparison, the previous high for April sales was last April at 65 million pounds.

It is worth noting that low prices have beckoned buyers from around the world, with heightened activity in Middle East, Asia and North Africa. The glaring exception has been Europe (both East and West) where shipments are down nearly 10% from last year. The "emerging markets" typically buy for nearby shipment and we might expect continued strong demand from these buyers over the summer.

However the road to higher prices is not necessarily flat. Reports from Spain are indicating a strong crop. Then on Friday last week the NASS released the Subjective crop forecast at 1.45 billion pounds. This was outside the range of expectations and shocked the market into a standstill the past few days. The subjective estimate is a telephone survey of 275 growers, representing 23% of the crop. Preliminary bearing acreage is estimated at 710,000 acres. California sellers are scrambling to determine how this forecast materialized and what to make of it.

Before the NASS forecast, prices for standard had strengthened. This was from a low in February. There has been strong demand for nonpareil and anything that might pass as a substitute.

Now the industry juggles with the uncertainty of next years crop versus the relatively solid fact that demand for almonds continues to continues to power along, particularly at these prices. We believe strong shipments will have more bearing for now. There are too many unanswered questions about the NASS forecast. Consumption has been the key to price direction and will continue to be so. Certain items will continue to be short supply and some premiums will ratchet further. Standards and more plentifully supplied categories, however, will likely have their ambitions capped until we get more information about next year's crop. Despite strong shipments, there will still be close to a 450 million pound carryover. Buyers and sellers are well aware of this fact.

We will continue to keep you apprised of developments.

Early May 2006

Good shipments for April were anticipated and the final result of 70.2 million pounds versus 58.1 million a year ago lived up to expectations. This is the second month of strong shipments and the market is taking notice. Concerns for tightness over the summer months have driven current crop prices to steep premiums over new crop. Ahead of the number, NPS 23/25 AOL prices for prompt shipment were trading in the $2.80 to $2.85 range, while new crop continues between $2.20 and $2.30. Standards for current crop have moved above $2.45 while new crop is being bid at $1.80 per lb.

The concerns can be considered justified. Computed inventory at 318 million minus expected carryout of 130 million leaved 188 million to be shipped in the next 3 to 3 ½ months (remember the 2006 crop may be late). This means only 54 million lbs per month. Last year the May July shipments averaged 72 million lbs. The industry is seeing strong export demand leading up to the position report as industry has sought cover for summer shipments. A good crop in Spain should help to ease the late summer transition in Europe, but nevertheless things will still be tight and first new crop shipments will be at a premium.

The change in commitments and shipping numbers show sales of 53.6 million pounds in April, up from 43.6 million April last year. From what we have seen so far, strong sales are expected to continue into May.
Expectations for a stronger 2006 crop should keep current crop upside potential limited. At some point buyers will prefer to wait rather than pay the current crop premium. If the SUBJECTIVE estimate (due out tomorrow) comes in stronger than expected we could see some new crop relief. We are told trees look heavy and as a result most of the feeling is that a number between 1 billion and 1.050 million is being anticipated.

March 2006

The Almond Industry February position report released today showed signs of shipments regaining momentum. Last month the industry shipped 62.152 million pounds, down 10% from shipments of 69.038 million pounds a year ago. The 10% decline in shipments is a notable improvement – the previous three months showed declines of approximately 20%. Perhaps it is too early to call this a trend, but if we see shipment momentum continued in March the market will be forced to take note. From what is being reported in sales and demand for prompt shipment there is a good chance that March could be a decent number.

The change in reported commitments shows sales last month of 60.1 million pounds, well up from last February of 37.65 million. This number is no surprise given the prompt buying activity over the past several weeks.

Crop receipts are now totaling 907.9 million pounds, reflecting an additional 9.1 million pounds during February.

Almond prices jumped higher after the freezing conditions about three weeks ago. Most items added about 30 cents per pound. About 10 to 15 cents of the gains were given up however, as sellers emerged on the sunny days that followed. Over the past couple days, concerns have been raised about the potential for freezing conditions over the weekend. Couple the cold concerns with the supportive position report and most sellers have now backed off. Damaging freeze will send the market higher, with very little chance of short-term downside should the freeze not materialize.

It will likely take till early April before the industry can truly note the nut-set. Until then there may be enough uncertainty in the market to keep prices supported.

End February 2006

Prices in the past week have moved up about $0.25 cents per pound on current crop across the board – and still few sellers. As weather conditions show some improvement over both the San Joaquin and Sacramento Valleys with Thursday and Yesterday being the warmest since the middle of last week, pricing pressure is most likely going to be up over the next few weeks until more is know about the new crop situation.

Temperatures climbed well into the 60's in all areas, with portions of the Northern San Joaquin and all of the Sacramento Valley having highs in the 70's. The combination of the hard frost last week, and the continued cool mornings has truly slowed down the Nonpareil Bloom over much of the Valley with most areas know in the Full Bloom Stage, with some Petal Fall in portions of the Sacramento Valley.

Bee Flight hours are now fairly close to, or greatly exceed the totals of last year's short bloom. Just for reference, a Bee Flight Hour is defined as a daylight hour with the air temperature 55 F or higher, with no rain, and winds less than 15 mph. The greatest increase in flight hours, relative to last year is now in the Southern San Joaquin Valley. Rapid increases are expected in all areas the next 3 days with close to ideal conditions in many areas with the exception of the cold mornings, which will delay some bee activity.

Bee Flight hours will increase by as much as 7 a day through the rest of the weekend as a dry ridge of high pressure holds over the Valley during this period of full bloom. The warmer conditions will accelerate the bloom again and most areas are expected to enter into the Petal Fall phase by the end of this upcoming weekend.

There has been some talk about an upcoming weather change with another round of frost and doom. We would tell you to take it as just conversation. Yes, the forecast is for increasing chances of some rainfall over much of the San Joaquin and Sacramento Valleys as early as Monday, and more so late in the week. Cooler conditions will accompany the rainfall, but this is a much warmer "core" storm system and the weather service says no frost is likely. Daytime temperatures will fall into the mid 50's to lower 60's for much of next week, possibly cooler in the Sacramento Valley. The impact will be mainly on the later blooming varieties in most areas, and even then it should be marginal. The coolest and potentially wettest conditions are likely late next week and into next weekend, then a slow return to warmer and dry conditions by the second week of March.

The bottom line is that there is no real way to evaluate the damage caused by frost but bloom maturity will surely be influenced with 100% damage expected in some orchards.

February 2006

The January 2006 position report showed the following:

Crop receipts:                          898.8 million pounds versus 988.4 million last year (down 9.1%)
January Shipments:                 63.3 million versus 77.6 million a year ago (down 18.4%)
August- Jan Shipments:           480.0 million versus 593.4 million a year ago (down 19.1%)
Committed, not shipped:          182.7 million versus 231.3 million a year ago

The continued slowdown in shipments is the main concern in this most recent report. Domestic (US) shipments contributed to the weakness, with January shipments of 20.9 million, down from 24.2 million a year ago. This is the second straight month of slower domestic shipments.

As we know, over the past month prices have continued to decline. Defaults have added pressure to prices as high priced containers have been left unpaid at the port and have had to find new homes. The list of defaulting buyers grows every week.

The effect has been that lower prices have encouraged some buying activity. Buyers are now looking at reduced downside risk and are more willing to commit. Also almonds are now less expensive than competing nuts and current wholesale prices translate to price points that are known to work at the retail level.

The bloom is now the main focus for the next few weeks. So far the weather looks good, but we are only at the very beginning and there is still time for adverse conditions to develop. In anticipation of a stronger 2006 crop, new crop is being discounted by about 25 to 30 cents to current crop.

Given the uncertainty of bloom and the additional uncertainty caused by the defaults no one can predict prices for the short-term. But at this stage, we believe that the upside price risk should bloom be disappointing is greater than the downside risk should bloom weather prove cooperative.

January 2006

The current almond market has become quite different from that experienced and reported earlier in the season. In general, prices have fallen more than 30% from their previous highs. As a result, most buyers have been buying slowly and are only covering their short-term needs. In turn, this has caused some growers and processors to become anxious to sell fearing inventories out way current demand.

The Almond Industry Position Report released this week indicated 2005 shipments were down 14 % compared to last year. It also confirmed what most in the industry believe that the crop receipts had moved above the objective estimate for the year of 880 million pounds. This means that the final crop should reach between 890 and 900 million pounds. That is almost 100 million more pounds available to sell than what was believe to be available earlier in the season.

In the unsettled market we are currently experiencing, there will be no magic moment as to when the market has peaked or bottomed out. Therefore, it is important for everyone in the industry to be realistic about current conditions.
We now have more than seven months left in this season before the arrival of the 2006 crop. Additionally last year at this same time computed inventories and market prices were nearly the same as they are today – last year, rather than go down, prices surged dramatically to the upside. If a problem develops during the bloom, the possibility of this happening again cannot be ruled out.

What are not known at this time is how the 2006 crop bloom will progress and what the eventual outturn of the 2006 crop will be. It could be a bumper crop or it could be a bust if wet and warm weather conditions prevail. It is also not known when buyers will determine it is in their best interests to cover their requirements for the season. Will they decide at some point to come out in force or will they continue to buy on a hand-to-mouth basis? And of course, we must consider the consumer – who was hit with higher retail prices and has already begun to shift their eating patterns.

Looking forward it is felt that purchasing at today’s price levels can be considered a realistic option for buyers because it can result in a reasonable average for the season. Buying hand-to-mouth remains an alternative. In either case, the entire 2005 crop will most likely be sold. And, if steady shipments continue at 85% of last year as they have for the last three months, the end result will be a manageable carryout similar to the last two years.

December 2005

With nearly 9 months to go in the 2005 crop season and most buyers following a hand-to-mouth purchasing strategy, the November Shipments report again shows another month of fewer shipments compared to the same period last year. November was about 90 million pounds, 13% less than last year.

At the end of November, crop receipts are nearly complete some maybe as high as 90 plus percent received. The November Almond Board report places receipts to date at 820 million pounds. With most Huller/Sheller’s having shut down early, it can be concluded that the 2005 crop will come in below the CASS objective estimate of 880 million pounds.

The next series of critical market information will be generated by the prevailing weather during the bloom and the first unofficial crop estimates that will follow in March 2006. This sets the stage for those perceiving a bumper crop to try and push prices down. In the meantime, growers and handlers in California have the option to accept the lower prices that have appeared recently, or, to be patient sellers and wait until more is known about the potential 2006 crop and the direction of the market during the intervening months.

October 2005

Total shipments for October 2005 were 111.9 million lbs, down 17.9 m lbs., or 13.8% versus last year and down 33 m lbs., or 22.8% versus October 2003. Domestic shipments were 34.0 m lbs, down 750 k lbs, or 2.2% vs. Year ago. Export shipments were 77.9 m lbs, down 17.2 m lbs, or 18% vs. a Year ago. Shipments for the first three months of the 2005/06 crop year total 250.9 m lbs, down 72.3 m lbs, or 22.4% vs. last year. Domestic shipments are down 10.4% and export shipments are down 27.4% for the year.

Forward reported commitments (representing 87% of the crop) now stand at 233.5 m lbs; down 25.7% versus last year indicating to us that buyers continue employing a “hand to mouth” strategy. Of the year to date shipments of 250.9 m lbs, 519.3 m lbs are already spoken for, representing approximately 52.9% of the predicted 2005/06 supply. For reference, at this time last year 684.2 m lbs, representing 61% of the available supply, were shipped and committed.

Crop receipts to date total 665.1 m lbs, down 11.6% versus last year. Applying a 5 year average of 76.1% of the crop received by the end of October, the final 2005 crop would total approximately 874 m lbs, close to the CASS Objective Estimate of 880 m lbs. However; based on crop size, some industry participants are advocating using 2001/02 as a comparative for this year. In 2001/02, the crop was 824.1 m lbs and 81.5% of the crop was in by the end of October. This would indicate a possible 2005 crop of only 816.1 m lbs.

As for the market itself, it continued to weaken over the last month with prices dropping $.15-.40/lb depending on the grade. Some traders and handlers have been aggressive sellers while other handlers have resisted selling, choosing instead to wait until more sizing and crop size details are known.

The dollar reached a 2-year high against the euro this week and has strengthened 10% in the last 6 months and 16.7% since the low set at the end of 2004. With climbing US interest rates and political uncertainty in Europe, the dollar is likely to continue strengthening, thus mitigating some of the benefits of lower priced almonds in the export market where two thirds of California production ends up.

End September 2005

The August ’05 industry shipment numbers were released and it was 57.4 million pounds, which was 21.2 million less than last years level of 78.7 million pounds (-27%).  Although down from last year, overall shipments were 17 million higher than the California Industry had expected.

August ‘05 Domestic Shipments were down by 4.8 million

     (- 16.4%) vs..  the prior year.

August ’05 Export Shipments were down by 16.4 million   

     (- 33.4%) in comparison to last year.

It is felt that the overall reduction in shipments for August was more a factor of a lack of supply as opposed to reduced demand.

Prices have remained relatively stable since early August of ’05 due to lack of activity caused by buyers on holiday and packers without available inventory to sell.  Recent weeks have shown a $0.05/lb increase in price resulting from buyers returning to the market and the realization of the sellers that the crop is coming in shorter than expected. 

World wide Spanish supplies were available earlier than normal due to the drought, but overall quality has been very poor (small sizes, shriveled nuts).  European buyers looking for lower prices and ready availability took advantage of Spain’s cheaper offers to fulfill their early requirements.  Since the Spanish crop is not expected to exceed 35,000 MT (77 million pounds), due to the severe drought during the growing season, it is expected that most of their supplies will be exhausted by the end of October 2005.

It is important to not that although the CASS estimate in late June predicted the 2005 Almond crop would be 880 million pounds, crop receipts over the past 30 days show the crop trending well below that figure.  Highlights are as follows:

            Cass Forecast: Nonpareil would be off 21% statewide from CY’04. 

            Actual Trend:  Nonpareil are off 20-25% in the southern valley (where the best crops had set) and 35 – 55% off in the central region (60% of the crop).  It is expected that overall, the Nonpareil crop will come in 30% smaller than in CY’04.

Cass Forecast: Pollinator varieties would be off 6.5% statewide from CY’04. 

            Actual Trend:  Only information from the southern region is available but yields so far are off 15-20% ( again where the best crops had set). It is expected that overall, the pollinators will come in 15% smaller than in CY’04.

Overall:  The 2005 crop is expected to be off by 20% totaling 798 million pounds. 

Other Crop Attributes seen so far:

            Higher Insect Damage:  Actual damage running 100% higher than last year (double).

            Large Nut Sizes:  Largest on Record for Nonpareil (96% of the nuts sizing 23/25 AOL).

Overall demand has really picked up in all markets since the beginning of September.  It is expected that pricing will firm and rise over the next several weeks.  Shipments in September looks to be very strong as of the 14th of the month.  Overall, it is expected that September shipments to be at least 27% less than last year due to supply shortages caused by the delayed harvest.  Pollinators from new crop are still not available and CY’04 carryout is completely depleted.

September 2005

California almond farmers reported last week that their crop looks lighter than current estimates. Government forecasters predict farmers will harvest 880 million pound of almonds, but growers (Hullers and Shellers) say weather and insects have reduced the crop. Rain at bloom time during the spring hampered pollination of the main almond variety. Then a hot July took a further toll. Experts say it is too soon to say how much lighter the crop may be, but most agree it won't be a calamity, but yet it continues to effect price offers.

June 30, 2005 Objective Almond Forecast Released

The June 30, 2005 objective almond forecast for the 2005-2006 crop year is 880 million meat pounds, according to the California Agricultural Statistics Service (CASS). This forecast is based on 550,000 bearing acres.

Gary Nelson of CASS said the forecast is up 3.5 percent from the May 11, 2005 subjective forecast of 850 million meat pounds and down 11.8 percent from this year’s crop to date of 998 million pounds as of May 31, 2005. The official announcement was made today at the Modesto office of the Almond Board of California, which funds the forecast.

The average nut set per tree is 5,461, down 23.8 percent from the 2004 almond crop. The Nonpareil average nut set of 4,650 represents a 30.3 percent decrease from last year’s set. The average kernel weight for all varieties sampled was 1.79 grams, up 23.4 percent from last year.

June 2005

This year is being called the year of the Perfect Storm in the California almond industry. 

An unprecedented fourth billion-pound crop was too much to ask of Mother Nature and as a result California had lousy pollination and even post-bloom weather, reducing this year’s much needed billion pounds by at least 150-million pounds.

The initial subjective California Agricultural Statistics Service (CASS) forecast released on May 11 was 850 million pounds from 550,000 bearing acreage. This is a 16 percent reduction from the 2004 crop from basically the same bearing acreage. The objective measurement survey is scheduled to be released June 30.

However, record prices will be set for a fourth straight year, but many believe they are simply too high, and will undoubtedly set back the market demand.

Almonds have evolved to the fourth highest value crop in California at $2.03 billion. Even though the crop will be short this year, it should not lose its standing with a crop value of about $2.5 billion.

The value of California almonds has increased 2,435 percent since 1970 even though acreage is up 224 percent, yield 117 percent and production up by a 602 percent.

Almonds are a worldwide commodity and 70 percent to 75 percent of California’s crop is exported. It is the largest exported value crop in the state at $1.3 billion.  Fortunately, the world market will get some relief from the California shortfall.  Spain has much better crop this year than it had last year. It should be about 120 million pounds. Last year it was a disaster in Spain with a freeze reducing production to only 33 million pounds.

The challenge this year will be to mollify California almond customers and try to reassure them that 2006 production should replenish supplies.  There is a tremendous backlash going on in the trade right now that is threatening to kill a big part of retail market.  It is being reported that big chains are not accepting today’s higher prices.  Almonds are a key ingredient in many new products developed in recent years, and this short crop will be a setback in continuing that growth.

Most expect almond product makers to unfortunately reduce advertising and promotion to throttle back growing demand. He said others will look at reducing the quantity of almonds in products like cereals and candy. Others could completely eliminate almonds from the ingredient mix.

Losing loyal customers with a pair of bad crops could spell economic disaster for the future as There is a huge wave of new almond supplies expected starting in ‘07 and building to 2010.  Some are projecting bearing acreage could be 730,000 acres by 2010, one third more bearing acreage than today.  The 2010 crop could easily total 1.5-billion pounds by then, almost double what is expected to be produced this year.

A good crop is needed again in 2006 to mitigate any harm the industry will experience in the marketplace with the high price for ‘05 almonds.  That alone will be another challenge for Mother Nature since there are only about 15,000 acres of new almonds coming into production next season.

The acreage gap falling behind demand is because almond prices were so low in 1999, 2000 and 2001 that there was no incentive to plant more trees. Growers were paid so poorly during those years that the supply needed today is simply not here.

The overall hope is that California almonds, already the benefactor of positive health news from eating almonds, could get even better news in the future when those big crops arrive.

Late May 2005

For the 2005 crop year, California’s crop is forecast to decline by 150 million pounds from 2004. Fortunately, the Spanish almond crop is predicted to nearly quadruple, increasing by approximately 95 million pounds. The Spanish crop appears to have recovered from last year’s devastating frost. However, the continuing drought in Spain may well deflate some of the anticipated increase before harvest. The 2005 world almond supply will decline for the third straight year dropping another 6%. Overall, 2005 supply will be 14% below the record set in 2002. The supply reduction appears more dramatic looking from California’s perspective. The 2005 California supply is expected to be approximately 16% below last year.

Assuming shipments in the current crop year reach one billion pounds, next year California shipments will be limited to approximately 850 million pounds. Under these circumstances a reduction in world consumption is not an option – it is a necessity. Supplies are simply insufficient to cover recent market demand levels.

Given the shortage of supply, higher prices become the mechanism for allocating available supply. Moreover, market prices today are providing growers with a good return on investment that is encouraging them to plant more almonds.

The impact of bearing acres will begin to be noticed in 2007 and more dramatically with the 2008 crop year and beyond. By 2010, bearing acres are expected to exceed 730,000 acres, a one-third increase over the total bearing acres existing today. Due to the smaller 2005 world almond supply, the remarkable 24-year average annual consumption growth rate at 5.7% cannot be sustained. And while price will choke off some demand, we can only hope that consumption will rebound quickly when supplies become available. Although relief may come with a better 2006 California crop, it may not be until the end of the decade when the historical consumption growth rate trend can resume.

In summary, the following outlook applies for the 2005 crop:
• California supplies will be down by approximately 16% from the 2004 crop year.
• World supplies will be down approximately 6%.
• Almond users that rely completely on California product will face a significant shortfall in availability, particularly in the case of Nonpareil.
• World consumption will be constrained by inadequate supplies for the second consecutive year.
• California almond shipments will drop to approximately 850 million pounds, which is 17% below the 2003 peak.
• Market prices will continue to reflect the substantial shortfall in world and California supplies.

Mid May 2005

Subjective Almond Crop Forecast Issued

The May 11, 2005 subjective forecast for the 2005 almond crop is 850 million pounds, shelled basis, according to the California Agricultural Statistics Service (CASS). The forecast is based on a survey of growers by CASS.

The 2005 estimate is down 15% from the 2004 crop of approximately 998 million pounds to-date. CASS forecasts the 2005 bearing acreage to be 550,000 acres. To access the 2004 California Almond Acreage Report released by CASS.

The Objective Measurement Survey, which uses sample almond counts to forecast the crop, is scheduled to be released on Thursday, June 30, 2005, at 12:00 p.m. at the Almond Board of California conference room in Modesto, California.

January 2005

The Almond Board Position Report for December confirms shipments during December of 89 million pounds, approximately 5 % below December of last year. This decrease partially offsets the 7% increase in shipments experienced during November. At the same time, it also places 2004 crop year-to-date shipments at 515.8 million pounds. This means industry shipments should remain approximately 3% ahead of the pace last year that ultimately set an all-time record for shipments during the 2003 crop season.

In the domestic market, net year-to-date shipments of 155.1 million pounds are up 13 % over year ago, while in the export market, shipments of 360.7 million pounds are off by about 1%. The significant gain in the domestic market can be attributed to across-the-board increases in shelled, manufactured and inshell almonds sold to customers intent on buying early and maximizing consumption. The marginal decline in export shipments involves lower deliveries to Asia, where buyers are showing the first signs of price resistance. Shipments to the important Western European market are virtually identical to last year. While there have been noticeable changes in shipments to particular countries within the European Union, these changes are not particularly meaningful as indicators of shifts in the European market. They have more to do with the ever-increasing ease with which goods can be landed in one country and quickly shipped to end users in neighboring countries.

At the outset of the season the California Agricultural Statistics Service (CASS) published a crop forecast of 1.080 billion pounds. Based on the just released California Almond Board statistics for December, 2004 crop receipts of 969.9 million pounds suggest a final crop size of about 1 billion pounds. This strengthens the belief of many in the industry that a crop shortfall will impede shipments later in the season and reduce the forecasted carryout. The scenario just described is already being reflected in the marketplace in the form of high differential pricing for late 2004 crop shipment positions and lower prices for early 2005 crop shipment positions.

With regard to sales strategies during December, origin handlers were generally reluctant or unwilling to make offers despite the high prevailing prices. In many cases this was because handlers were sufficiently well sold that they deemed it prudent to wait and sell closer to the 2005 crop bloom period. This reluctance to sell, coupled with the traditional absence of buyers during the period leading up to the Christmas holidays, meant that trading in December was limited.

During December the Dollar continued its slide against the Euro, losing 7.1% for the year. The Dollar posted some gains at the beginning of January after U.S. Treasury secretary, John Snow, announced he intends to do take some steps to sustain the strength of the dollar. If buyers perceive the Dollar has bottomed out, it could spark some near term buying interest in export markets. If the Dollar were to strengthen dramatically it could dampen the willingness of export markets to pay the high prices that prevail in the current market.

December 2004

November 2004 shipments were 103.39 million pounds, an increase of about 7% from the November 2003 shipments of 96.759 million pounds. Receipts through November 2004 were 910.7 million pounds, down compared to last year. Remember that this year’s crop was early which could account for the strong shipment number. The industry received 149 million lbs in August as opposed to 46 million lbs during August 2003. Looking at the past 6 seasons, the industry received on average 91.5% of the crop through November. This year it could appear that they have already accounted for 96% of the crop, as was the case during the 2000 / 2001 season. Some might say the crop is going to be closer to 950 million lbs. These recent industry numbers today validate that type of thinking. Best-case scenario, assuming that the industry has only received 87.9% of the crop, that still puts the crop at 1.036 billion lbs. This is still about 50 million lbs short of the CASS estimate.

Shipments to date for the 2004 crop year are 4.77% ahead of last year. Domestic shipments are up 16% and even export shipments are up 0.62%. The increases in price through November have not slowed down shipments. On the contrary, they are running ahead of last year. We believe the full extent of the recent price increases will not be felt for another few months.

The actual Supply is where the true questions lie:

Carry-in from last year              148.9 million lbs
Projected Crop Receipts           950 million lbs
Less 4% loss / exempt             (38 million lbs)
Total supply                             1.06 billion lbs
Less shipments to date             (426.578 million lbs)
Less reasonable carry-out          (140 million lbs)
Less committed inventory          (274.978 million lbs)
Supply remaining:                     218.4 million lbs

Even assuming that the committed inventory number is not accurate, or is sold to re-sellers we are still looking at a very tight supply picture with 8 months of shipments still ahead of us. If we completely ignore the committed inventory segment, we have a remaining availability of 493 million lbs after we account for a 140 million pound carryout. This means 61.75 million pounds per month for the rest of the season. Last year, the industry shipped an average of 77 million pounds during this 8-month period. So shipments have to come down by 20% a month compared to last season if we want a carry out of 140 million lbs. If shipments stay on last year's pace of 77 million lbs per month, the industry will have no almonds left by August. Zero carryout, which simply put the industry will not allow to happen.

Some positive news is that most of the European countries are down. France is about the same as last year, as is Germany and Greece. Spain is down nearly 8%. In Eastern Europe, virtually all countries except for Russia and Lithuania are down. The Czech Republic is down 2.1 million lbs - an amazing 63%. In the Middle East, the United Arab Emirates is the savior, up over 4 million lbs or about 60%. Cyprus is up but all the other markets are down. Saudi Arabia is down over 40%. In Asia the shipments are more balanced. Singapore, S. Korea, Taiwan and Thailand are all up. In shell to India is up 25%. But in shell and shelled shipments to China are down considerably, as are shipments to Japan.

It is believed that countries like Spain, Germany, Holland and Italy, all have more buying to do. It appears they have in recent days taken more January and February positions, but March onwards is still mostly uncovered. Those almonds are going to have to come from this crop

Market factors are bullish. Absent an unexpected strengthening in the dollar, it is unlikely that anything of enough consequence will happen between now and new crop to reverse this bullish trend. December is in all likelihood going to be a strong shipment month. If it only stays on last December's pace of 93.6 million pounds, we will have shipped a total of 520 million pounds in a crop that at its very best will barely make 1 billion pounds.

We are all experiencing a market where the consumption fundamentals have changed. More people around the world are eating almonds. One billion pounds of consumption is no longer an aberration, but rather has become the norm. Even at higher prices, people are choosing to consume healthier products and this certainly includes almonds and other nuts. The Almond Board has done a fine job, as have people throughout the almond supply chain, in promoting almonds.

It is clear that going through a period of price readjustment is required before Almonds reach equilibrium between supply and demand. There will undoubtedly be a correction in the months and years ahead, once the increased new plantings come into production and they are faced with the projected 1.5 billion pounds by the 2009 season.

September 2004

Advance sales of 2004 crop by the industry in the months leading up to the harvest were fairly steady, however, during August, sales surged. This was due to the apparent readiness of many buyers to abandon self-proclaimed strategies of holding out for lower prices. As buyers came forward to cover their requirements, they were obliged to pay steadily increasing prices. By the end of August most growers and handlers seemed to be well satisfied with their early sales positions.

Due to strong sales, many sellers have decided it is prudent to evaluate the 2004 crop turnout in more detail before committing additional tonnage. This reduction in selling activity created additional upward price momentum. Whether this will continue or start to flatten out remains to be seen. A positive aspect of sellers taking time to gain a more detailed knowledge of the 2004 crop turnout is that the industry will be in a better position to serve key customers in the long crop year that still lies ahead.

The Huller Sheller Report, issued on September 3rd, estimated the crop at 1.070 billion pounds. This appears to largely corroborate the CASS estimate of 1.080 billion pounds announced at the end of June. Clearly, if strong global consumption continues, it is difficult for sellers to envision lower prices, especially in the short term.

Another factor, contributing to the inclination of sellers to wait before committing tonnage was the expectation that August shipments from California would once again rise into record territory. In the absence of any evidence to the contrary, most industry observers were of the belief that record August shipments would argue in favor of firmer prices, or at the very least a solidification of prices at current levels. On September 9th, the Almond Board announced that August shipments from California totaled 78.7 million pounds. This represents another record and eclipses the previous all-time record for August by more than 12 million pounds.

As a result of more buying interest, increasing seller caution, and the anticipation of record shipments, prices strengthened dramatically during August and the first week of September.

July 2004

Since our last update, three important events occurred. They were: the Almond Board of California announcement of June shipments from California, the California Statistical Service (CASS) Objective Crop Estimate, and USDA approval of an industry-wide plan to ensure that all almonds destined for raw consumption undergo some form of pasteurization.

June Shipments from California
June shipments from California were 73.7 million pounds, a quantity almost identical to the 73.9 million pounds reported for June of last year. With one month still to go in the 2003-2004 crop year, total shipments are already 949.9 million pounds. This means July shipments only need to be 50.1 million pounds to establish a new milestone for the industry in California -- shipments of 1 billion pounds. If in the month ahead the industry matches the 59.5 million pound shipment volume recorded last July, the billion pound mark should be easily exceeded.

2004 Objective Crop Estimate
On June 30th CASS reported that their objective estimate for the 2004 crop is 1.08 billion pounds. This figure is only marginally less than the CASS May 10th subjective estimate of 1.1 billion pounds. As a result, the reaction in world markets was limited. Origin prices that prevailed during the period leading up to the estimate remain largely unchanged. Attempts by some traders to solidify the market at lower price levels failed because California handlers largely remained on the sidelines.

With the announcement of the objective estimate and June shipments now known, buyers are in possession of nearly all of the important information they need to make there purchasing decisions. When the time comes, buyers from around the world will come forward and California handlers who are patient should be able to sell at prices determined in California not overseas.

USDA Approved Industry-Wide Action Plan 
The Almond Board of California has informed all almond handlers that USDA has reviewed and approved an action plan prepared by the Almond Board Food Quality and Safety Committee that is designed to eliminate consumer exposure to microbial contamination in almonds. This food safety program involves application of thermal processes, approved fumigants, or other technologies sufficient to achieve a 5-log reduction in bacteria on all almonds entering commerce. While the proposed plan is currently voluntary, efforts are underway to mandate full compliance before August 2005. FDA is reviewing current industry practices related to oil and dry roasting, blanching, scalding and drying, to validate these as a 5-log reduction processes. Because the strategic direction at Blue Diamond has been to maximize the production of high value added manufactured products; crucial roasting, blanching, scalding and drying processes are already in place and being used extensively at their facilities.

Almond Crop Objective Estimate Released June 30th, 2004

California's 2004 almond production is forecast at 1.08 billion meat pounds, down 2 percent from May's subjective forecast, but up 4 percent from last year's crop. The forecast is based on 550 thousand bearing acres. Production fro the Nonpareil variety is forecast at 390 million meat pounds, up 3 percent from last year's deliveries. The Nonpareil variety represents 36 percent of California's total almond production.

The almond bloom started in mid-February, and even through the heavy rain and wind, the bloom was very intense with both the variety and pollinators blooming together, which most likely helped the set. The bloom was strong, stayed on the trees longer than normal. This together with the warm weather in the beginning of March advanced crop development and the crop is currently ten days to two weeks ahead of normal. The kernel size appears to be about normal. The younger trees look to have a very good set.

Overall the crop appears to be fairly uniform throughout the state and growers expect to have a good crop.

Almond Crop Subjective Estimate Released May 10th, 2004

The initial forecast for the 2004 California almond production is 1,100
billion pounds. This is up 6 percent from last year's revised production of 1,040
billion pounds. Estimated bearing acreage for 2004 is 550 thousand.

This forecast is based on calls made April 22 - May 3 to a sample of almond
growers. Of the 420 growers sampled, 281 reports were usable. Acreage from the
usable reports accounted for 18 percent of the total bearing acreage.

The almond bloom started in mid-February. Growers thought heavy rains and
wind during the bloom may have affected bee activity and pollination. However,
the bloom was very intense with an excellent overlap of blooming varieties.
Bloom was strong and stayed on the trees for much longer than normal, which may
have been due to the cool, damp weather. Even the strong winds and heavy rain
in late February did not appear to affect the set. Some trees were reported
blown over by high winds, but total damage was minimal. Very warm weather in
early March advanced crop development, which is currently at least two weeks
ahead of normal. By early May, the kernels had already hardened in some
varieties, which is much earlier than normal. The kernel size appears to be about
normal. The younger trees seem to have a very good set. Growers indicated that
the Nonpareil crop may be a little below last year, but the other varieties have
a very heavy set. Overall, the crop appears to be fairly uniform throughout
the State and the growers expect to have a good crop.

April 2004

Industry shipments from California are nothing short of spectacular. March shipments were 82.0 million pounds.  This is 27 % greater than last March and double the historical average.  Because March is not a month normally associated with heavy shipments, this could be interpreted as strong evidence that consumption of California almonds remains on the rise.

Crop receipts that had ratcheted up last month by 1 % increased again this month, except at a lesser rate of ½ %.  Receipts to date now total 1.031 billion pounds. This quantity is expected to continue to inch-up slightly in future reports. However, with the industry firmly on track to ship more than 1 billion pounds this year, such increases are strongly desired. It is already widely anticipated there will be problems this summer matching customer needs with remaining supplies.

Overall, the ratio of shipments this year between domestic and export markets are roughly the same as last year.  Increases in the domestic market are driven by higher manufactured sales, and, increases in the export markets are the result of higher shelled almond sales.  As previously reported, short crops in the Mediterranean countries have fueled the increase in export shipments.  With serious frost damage to the 2004 crop in Spain now confirmed, the phenomenon of increased shelled almond shipments into the export sector will continue in the new season.  

The subjective CASS estimate, is due to be published on May 10^th.  Most sellers in California appear to be waiting for this estimate before drawing further conclusions about sales strategies to follow for remaining quantities of 2003 crop and for the as yet undetermined quantities of 2004 crop.

March 2004

Once again, industry shipments from California have ascended into record territory. At 75.7 million pounds, February 2004 shipments shot by the all-time record of 66.7 million pounds for February set last year. As a result total shipments of 2003 crop are increasing over last season.  Last month total shipments were 1.5 million pounds ahead of last year, this month that lead has increased to 10.5 million pounds.  Total shipments now stand at 653.5 million pounds versus 642.0 million pounds one year ago. This performance confirms that consumption continues to go well for California almonds.

Crop receipts continued to ratchet up during February adding another 1 % to the amount reported last month.   Receipts to date now total 1.025 billion pounds. This is not far from the CASS estimate of 1.0 billion pounds made at the start of the season. Taking carry in into account, total supply for 2003 is now 1.146 billion pounds. If it is assumed that shipments will maintain their current pace, the industry may well ship more than 1 billion pounds this season.  As such, the increase in receipts is both desirable and necessary. 

With regard to specific shipping patterns, domestic shipments of 21.8 million pounds during February were nearly identical to last year. A slight decline in shelled almond shipments was offset by higher shipments of manufactured items, the latter a result of increased growth in that sector. The strong boost in export shipments from 45.2 million pounds last year to 53.9 million pounds this year can be attributed entirely to shelled almonds.  This result is driven mostly by demand for raw material in Mediterranean countries where this year processors were faced with extremely short crops in their own countries. Following the recent onslaught of heavy frost in Spain, it appears that the 2004 crop season will also see higher than usual demand in Mediterranean countries for shelled almonds from California.

The market, responding to the changing weather patterns has seen some oscillation in the prices reported last month. At first, based on good weather forecasts and indications that the bud set was strong, prices softened. Then as cool weather prevailed, rains appeared, and a full Pacific storm swept across the valley, prices firmed. Finally, at the end of the bloom with the sun shining and bees out in force, prices eased slightly.  Current and new crop prices have generally merged for the time being.  This could change depending on how many supply problems emerge during the transition between the 2003 and 2004 crops, and the ultimate size of the 2004 crop.

February 2004

Industry shipments for January, 2004 totaled 77.0 million pounds, down
slightly from last year's record of 81.0 million pounds. Again, as was the case in
November, although the shipment number is down, it is by far the second
largest in history. Total shipments for this crop year are just slightly ahead of
last season, 577.8 million pounds compared to 576.3 million pounds.

Crop receipts jumped to 1.015 billion pounds just slightly exceeding the CASS
estimate of 1 billion pounds. The industry reported an additional 29 million
pounds of receipts in January. The additional tonnage is good news in an
industry that has been less than enthusiastic about forward sales.

Domestic shipments fell slightly to 21.6 million pounds compared with last
year's total of 23.5 million pounds. However, shipments to date of 158.3
million pounds still slightly exceed the 156.9 million pounds recorded last season.
Of interest, domestic shipments of brown almonds are down about 10 million
pounds while manufactured shipments are up about 14 million pounds. This is a
total reversal from last season when brown shipments increased 50 million
pounds for the year while manufactured shipments were down slightly. Export
shipments also decreased slightly to 55.5 million pounds vs. 57.6 million pounds.
Export shipments to date are now about exactly the same as last year at 419.5
million pounds. Other almond producing countries, Italy, Spain and Greece, are
up almost 21 million pounds. Russia and France also reported increased
shipments of about 6 million pounds. This means the rest of the export countries
are down a collective 27 million pounds. Of course, higher prices should have
the effect of lowering consumption.

Computed inventory is 558.9 million pounds compared to 535.2 million pounds
last season. However, commitments this year are reported at 237.6 million
pounds, approximately 40 million pounds more that last year. The net effect is
that the reported uncommitted inventory is 321.3 million pounds or 17 million
pounds less that last year at this time.

Market prices remain very firm and in fact may have risen slightly during the
month. Sellers are very content with their sold positions and are not
willing to chase any business that is not in their price range. There are constant
inquiries from buyers for coverage through August. It is believed within the
industry that it is getting difficult for buyers to find the type of almond
they need or to find handlers who want to cover long term

Right now all eyes are on the 2004 almond crop that will begin its annual
birthing process within days. The bud set looks excellent. The chilling hours
have been plentiful. Water should be sufficient. Now all we need is some good
weather and hungry bees.

January 2004

Following a slight dip as reported in November, industry shipments bounced back into record territory in December. Total shipments for the 2003-2004 crop year have now reached 500.8 million pounds, compared to 495.3 million pounds for the same period last year. With seven months remaining in this crop year, the industry is on track to reach, and perhaps even exceed, the Almond Board of California shipment forecast of 950 million pounds.

Together with the news of increased shipments came news that receipts had climbed to 985.9 million pounds. This was slightly more than anticipated by the market but less than the 1,043.8 million pounds received through December of the prior year. Taking into account the August 1, 2003 carryin, the total supply for the 2003-2004 crop year now stands at 1,109 million pounds. This exceeds last year at this time by 2.4%. Considering the ever persistent growth in annual almond consumption and the shortfall this year in Mediterranean crops, any such supply increase is good news.

Last year for the period January through July, additional crop receipts amounted to 40 million pounds. Applying this amount to year to date 2003-2004 crop receipts means that the industry should reach or slightly exceed the Almond Board of California estimate of 1 billion pounds for the year. Again, this is good news for the reasons mentioned in the preceding paragraph.

At 27.2 million pounds, domestic shipments during December were particular strong, up nearly 4 million pounds over last December. This surge was led by increased demand for manufactured products. At 66.4 million pounds, export shipments were up only slightly over the same period last year. Higher shelled and manufactured shipments were offset by lower inshell shipments. This is the result of market timing issues and not a structural change in export markets.

Computed inventory at the end of December is 607.8 million pounds, which is a little more than last year. This is counterbalanced by higher commitments of 248.5 million pounds. The net result is that uncommitted inventory is a little less than last year at this time.

After a relatively slow period associated with the year-end holiday lull, buying interest began to pick up this month. Part of the reason for this is the significant decline of the U.S. Dollar against other major currencies, particularly the Euro. This is giving overseas buyers, many of who were slow to commit, an opportunity to buy without feeling the full effect of higher almond prices from California. In addition, some buyers are coming forward to buy quantities now as a hedge against a possible poor bloom in February.

December 2003

The Almond industry shipped 96.8 million pounds during November.  Although under last season's record 112.1 million pounds of shipments, it is still, by far, the second biggest November in history.  Please remember that last year the industry was playing catch-up in November after the dock strike.  This brings total shipments this crop year to 407.2 million pounds, compared to 406.0 million pounds last season.

Crop receipts are reported at 914.2 million pounds compared to 952.4 million pounds through November last season.  Last year they received another 130 million pounds after November.  Most people agree that the 2003 crop does not have that much left to deliver.  It is felt that final crop numbers could range from 950 to 985 million pounds. 

Domestic shipments fell off to 25.6 million pounds from the record 31.1 million pounds shipped in November 2002.  This brought domestic shipments to date to 109.5 million pounds, just slightly less than last season.  Of interest, inshell shipments are off by 36%, manufactured shipments are up over 9 million pounds or 32%, and shelled shipments are down almost 9 million pounds.  These are some trends that will bear watching.  Export shipments were also down for the month (almost 10 million pounds).  However, shipments to date are still slightly ahead of last season, 297.7 vs. 295.9 million pounds.  Heavy shipments into Spain, Italy and the Eastern Bloc have compensated for lower or static shipments to most of the rest of the world.

Computed inventory is 632.5 million pounds compared to 589.2 million pounds last year.  At the same time, commitments are up over 30 million pounds at 284.6 million pounds vs. last season at 251.6 million pounds. This leaves the uncommitted inventory at 347.9 million pounds or only 10 million pounds more than last season.

Sellers seem content to hold unsold tonnage while buyers who are covered through December will not show their colors until they actually need shipments.  Buyers in Europe who are short continue to think that prices will soften while sellers are content with sales and reluctant to sell.