Almond Update
May 2010 shipments were 91.9 million lbs.
- Down 23% from May 2009 shipments of 119 million
- Domestic shipments were up 19% and exports were down 39%
- Down 23% from May 2009 shipments of 119 million
- Domestic shipments were up 19% and exports were down 39%
The market has remained fairly inactive for another month. Following a few weeks of further declines, pricing was relatively flat for the past two weeks.
SHIPMENTS/DEMAND:
Today’s report brings shipments for the season to 1.26 billion vs. 1.15 billion at this time last season, up 9.7%. Overall both exports and domestic shipments are up roughly 10%, though exports started out the season real strong and domestic shipments are heavy late in the season. This huge May vs. May decline in shipments can be attributed to buyers working through inventory and positions world-wide (China off 5 million lbs, Europe off 9 million lbs., Central/Eastern Europe off 8 million lbs., Middle East off 13 million lbs.)
THE 2009 CROP:
Crop receipts as of May 31 were 1.405 billion lbs, still showing the impressive accuracy of the NASS objective estimate of 1.350
THE 2010 CROP:
NASS’s 2010 objective crop estimate is due for release July 8 instead of June 30. The Almond Board advised recently “USDA’s National Agricultural Statistics Service (NASS) has found it necessary to delay the almond field data collection due to the extremely late maturity of the crop. Most field crews have not been able to begin their orchard work as they wait for the kernels to mature. However, the situation is improving with temperatures rising to near normal levels in recent days.“
We’ve experienced a good growing season with plenty of moisture and without extreme temperatures. The trees appear to have a strong capacity for 2011. There’s been an absence of stress, which in other years can degrade kernel size or quality (shriveled, etc.) The hulls and kernels appear to be good sized but we await the NASS Objective report for detailed info on sizing. We do not know with much certainty this early, but current expectations are for a late harvest.
20/20 RETROSPECTIVE & HAZY OUTLOOK:
During this season, buying patterns have dominated the market trend. Low but rising prices was the perfect catalyst to cause many buyers to stock up on almonds from October through mid winter. Then buyers in many markets took a step back to work through inventory and long positions before buying more, which slowed sales at the handler level. Working through the long positions and big stocks took longer than many expected, in many markets, not just China. Lately the sense is that in some markets the inventory has been worked through but the downward price trend has caused buyers to delay purchasing decisions. The economic uncertainties world-wide, especially in southern Europe, has also caused more hand to mouth buying.
Discussions of defaults in Europe, one UK trader in particular, is hurting market sentiment for the short-term. Re-sales of abandoned containers have slowed sales at origin. Though putting it in perspective, if it’s 100 containers, the industry is only dealing with about 3-4 days of EU consumption.
Spanish almonds have taken away some California almond demand this season, particularly in southern Europe. The Spanish crop, damaged by frost, is estimated to be much smaller for the coming season.
May shipments were expected to be weak but this number was lower than we anticipated. Inventory adjustments up or down can cause such swings for one month, and if the industry can focus more on the big picture, it can take some of the over-corrections out of the market. Looking at this bigger picture we see a 2010 crop year supply very similar to the 2009 crop and world-wide consumption that appears robust. We estimate that at some point within 30-90 days a lot of pent up demand will come back to the market and cause a reversal of the current market sentiment. In the meantime the very near-term outlook remains hazy.
The next position report is due July 9, the day following the NASS objective estimate release.
Questions regarding the report should be directed to Paul Ewing (paul@hilltopranch.com).
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