August 2024 Almond Market Report

Harvest is well underway and the August Position Report makes it clear that harvest began earlier this year than last with crop receipts up +313% YoY. Considering last year's late start, the 290 million pounds received in August compares better with receipt totals from crop years 20-21 and 21-22 which saw 312 million pounds and 264 million pounds respectively.

The final adjusted carryforward topped 502 million pounds, -37.19% below last year. Even with an earlier harvest, total supply is currently down -9.44% YoY and total Computed Inventory is off -5.84% YoY. Considering the Objective Forecast’s 2.8 billion projection, total annual supply would be estimated to near 3.25 billion pounds after factoring in a -2% loss and exempt rate. This is just +1.5% above the total supply available a year ago.

Shipments in August fell -20.63% YoY. Domestic shipments were up +1% YoY while export shipments were down -29.5% YoY. Total commitments were also down YoY declining -2.30% with new commitments in August off -14.8% from a year ago. Uncommitted inventory sits at just 11 million pounds, down -68.44%, but plenty more is on the way with harvest just beginning.

Harvest Conditions

Weather conditions have been near ideal through the early phases of harvest. Temperatures have been at or above normal for much of the growing region with generally low levels of humidity. This has aided in the continued maturation of almonds and allowed for adequate drying. Weather patterns traditionally remain dry through harvest in California with any precipitation generally light and short lived. With harvest beginning earlier this year, there is less concern about weather becoming a factor as harvest continues.

Initial reports from hullers suggest that kernel sizes appear to be coming in just below normal. Concerns of widespread insect and serious damage seem to be subsiding as well, though with the majority of the harvest still ahead, there is some lingering concern that pest damage may again be an issue.

Market Round Up

Importers were active as India continues to prepare for Diwali. Shipments to India were up +24% from a year ago in August, nearly topping 28 million pounds. A rebound in velocity was expected after logistic pressures and diminished supplies suppressed shipments to India in July. With local markets generally well supplied with on-hand inventory, there may be less urgency than in years past to purchase ahead of Diwali; however, inventories are not perceived to be sufficient to support consumption through the festival and buyers will continue to need to participate in the market.

Every single Western Europe market imported less in August than a year ago. Volume to the region was off -39% YoY with large markets like Spain and Germany off -44% and -56% respectively. As a relative bright spot, the Netherlands was off a modest -4%. These figures would be striking if they were sustained over a period of time. As a single point however, perhaps not so much. Our assessment is that the region on the whole has had sufficient inventory within supply chains to cover immediate needs. With some uncertainty in crop size and a tighter transition, sellers were not as active in their offers and this may have combined to create a situation where EU buyers simply preferred a wait and see approach. How engaged EU markets are in September will be something we will watch with interest.

In Northeast Asia, China, Japan and South Korea all imported less in August than a year ago. China was off -73% importing just 1.7 million pounds compared to 6.2 million pounds a year ago. Japan and South Korea were both off -22%. Shipments to these NE Asian markets may be largely influenced by availability of preferred specifications at this time. Shipments to Japan and South Korea in particular seem to fluctuate in line with the carryforward in recent years, with larger volumes being shipped when more inventory has been on hand. California handlers may not yet have processed incoming inventory to supply these markets adequately in the absence of a robust carryforward. We’ll look for a modest rebound in September.

Vietnam was a relative bright spot in export markets as it continues its resurgence as a value-add market. Importing 3.8 million pounds in August, it saw a +71% growth rate over a year ago.

The Middle East as a region was off -41% in August. The UAE was off -59%. Again the assumption here is that shipment volumes have been impacted by both the availability of preferred specs as well as buyers being cautious not to over extend as harvest begins. Previous shipment trends for the region point to continued robust demand and we will look for shipment strength to return in September.

Adding Context

The lighter shipment figures observed in July and August may have some heralding a return of the bears. Just because shipment figures were not large and eye-catching doesn’t mean you should pay them heed. Doing so would ignore the other side of the supply and demand equation.

A 500 million pound carry forward with nearly 2.7 billion pounds in shipments last year calculates an 18.5% stock-to-use ratio. Recent carryforwards from oversupply scenarios make it easy to forget what a healthy market looks like where the carryforward is below 20% - handlers do not have the same flexibility and capacity to supply customers’ preferred specifications. At the very least, handlers may be weary about taking prompt orders if they have others on the books with harvest still ongoing. Remember, tonnage received from harvest doesn’t mean it’s ready to ship. It still needs to be processed and collected in sufficient volumes to meet demand. At the moment there just isn’t enough access inventory on hand to expect shipment figures to be much higher than they were.

We should also consider that eventual crop size remains murky and there has been some concern that yields may be lighter than anticipated. Paired with less on hand inventory, sellers have been taking a more cautious approach in what they offer, and we see this with modest commitment figures being added to books in August. As harvest continues and inventories are replenished, handlers will have more flexibility in what they can offer and will have additional capacity to fully meet demand.

Some markets have been able to be more patient than others where supply chains had ample inventories on hand. There may have been a segment of the buying community playing the waiting game as well as initial reports from harvest came in. But markets are far from saturated, and early reports did not provide any indicators to push yield expectations one way or another. Behind the oversupply situation the industry has been experiencing is a steady consumption growth and handlers adjusting to a reality where volume is no longer needed for volume sake are likely to be more selective in the business they take. And as prices have continued to firm there is little doubt that the demand is there.