April Almond Market Report

April’s Position Report shows that California Handlers shipped over 241 million pounds during April. This figure was essentially flat YoY off just -0.2%. Export shipments however set a new record for April totaling nearly 188 million pounds and growing +6.3% YoY. Domestic shipments were down -17.8% marking the second straight month of year over year double digit declines. On the crop year, export shipments are steady, off -0.07%, while domestic shipments are off -5.2%. Total shipments are off -1.4%.

New contracts in April lagged behind their pace last year. This is reflected in uncommitted inventory raising to +4.26% YoY from -1.10% a month ago. However, the rate at which new contracts were executed would have outpaced any of the next five most recent years. This indicates that buying in April remained historically strong even though it didn’t reach the levels seen a year ago.

Subjective Forecast

The USDA released its Subjective Forecast on May 12th. The forecast is based on a robust survey of growers of various sizes across the entirety of California’s growing region. The forecast estimates a crop totaling 2.8 billion pounds. This yield would represent a +3% increase in supply for the coming season. The was calculated estimating 2,010 pounds per acre across 1.39 million acres. These are increases of +30 pounds per acre with an additional 10,000 bearing acres over a year ago.

Markets

India imported almost 46 million pounds in April. A year ago, April imports were roughly 33 million pounds. That's an increase of nearly +40%. The subcontinent is now just -4% behind on the crop year. The volume increase in April is largely being driven by local supply chains needing to replenish with low on-hand inventory levels, but it’s possible that buyers were also motivated by other economic factors. Us-India trade relations have continued to be positive and has generally avoided conflict in the face of the US's trade war. This could have lent added confidence to buyers looking to import but concerned of possible reciprocal tariffs being levied. Whether this factored into the recent buying pattern or not, buyers likely won't continue to import at such elevated rates. That said, the volume is not sufficient to cover through transition and India's demand for almonds remains strong. With the Subjective Forecast all but confirming the supply side of the equation, any additional quickening of imports by India could certainly influence the market.

Western Europe saw strong shipment figures in April. The region as a whole saw +26.6% more imports, totaling +13.4 million additional pounds, than it did in April a year ago. This comes on the heels of March figures that were significantly lower than the year prior with importers bringing in over -9 million fewer pounds than a year ago. This context makes April's figure appear more of a balancing than an indicator of a new growth trend. As it stands, Western Europe is just -1% behind on the crop year.

Spain, as the largest market in the EU, is off -14% on the crop year. Germany is down as well and is behind its shipment figure -17%. But while Germany has fallen from the EU’s second largest market to fourth, two other Western Europe markets have seen significant growth. The Netherlands is currently seeing growth of +28% on the crop year while Italy is seeing +10% to claim the second and third largest markets in the region respectively.

The Middle East continues to be a growth driver for California almonds. The region is pacing +13% growth on the crop year. The UAE saw huge volume growth in April over a year ago and is now growing at a +3% rate on the crop year. Turkey is up +24% on the crop year and currently ranks as a top 5 importer of California almonds globally. Elsewhere in the region, Saudi Arabia is up +34%, and Jordan continues to establish itself as a significant market and is up +39%.

Morocco imported less than half the volume in April than it did a year ago. This pushed its growth rate into the negative and now paces a -6% figure. Our sales team has noted waning demand from the market as prices have firmed. This is not unusual for developing markets and some time will be needed for it to adjust accordingly.

Market Analysis

Little has changed fundamentally with the publication of the Subjective Forecast. Industry consensus had coalesced around a reality that while bloom was sufficient, conditions weren’t such that it could produce bumper crop. The Subjective Forecast simply reemphasizes this.

On the demand side, shipments were largely equal to what they were a year ago in April and the industry continues to pace a shipment volume that targets 500 million pounds as a carry forward. California handlers need to ship a very modest 200 million pounds a month through the last quarter of the crop year to reach this figure. At a 500 million pound carry forward, the industry would be at approximately an 18.5% stock-to-use ratio. This would indicate supply side constraints as 20% has historically represented a balanced market. This means handlers are going to have little if any room to accommodate shipment growth and are likely to be conservative overextending contracts through the transition to ensure they have adequate coverage. This could put pressure buyers looking for prompt shipments.

Trade uncertainties are an interesting X-factor to consider. Trade dynamics seem to change on a daily basis. While impacts directly to almond trading have largely been avoided, it is true that overall global supply chains have seen impacts. As these supply chains react it is plausible that there could be secondary impacts effecting almond trade. As an example, ships coming to US ports coming from China has significantly declined. Could fewer ships coming into the US from China decrease the number of ships available to carry US exports? Could US buyers looking for alternatives to China increase demand for shipping between markets like Vietnam and Southeast Asia, and could that drive down shipping costs for goods going back to these destinations providing added incentives to bring on added inventory? We don’t have answers for these questions, nor do we pretend to know how trade uncertainty may play into the almond trade. Heck, all talk of a trade war may be resolved tomorrow. That said, there remains some general uncertainty that may yet have impacts in markets and we will look to contextualize as anything materializes.

Any logistical impacts are likely to be short lived, and dialog between US trading partners seems to have avoided most of the worst case scenarios for the majority of US trading partners, at least for now. Generally almond markets are strong with continued demand. Available inventory levels will constrain growth. This will continue to put upward pressure on the general market. As we near the end of the crop year, prompt shipments are likely to demand additional premiums as handlers look to ensure ample supply through the transition. This could play a major factor in market prices as many major markets continue to operate hand to mouth and will need to seek additional inventory. Fundamentally California almonds remain in a bull market.