February 2025 Almond Market Update

California almond handlers shipped nearly 215 million pounds of almonds in February. This was -2.8% below shipment figures from a year ago. On the crop year, handlers have shipped just -0.84% below what they did a year ago. Domestic shipments were off -4.4% YoY in February, while export shipments were off -2.2%.

New commitments in February barely out paced the rate of shipments with handlers adding 220 million pounds of contracts in February. This pace is largely on trend with the pace of new commitments seen in February over the past several years, but it does stand as the busiest February in the past five years. The higher rate of purchasing is reasonable to expect with shipments largely flat year over year while Total Commitments are currently behind -8.48% YoY.

Supply has been in focus for a while now. In February handlers didn't even add 20 million pounds to total receipts. While total receipts are up +11.3% YoY, Total Supply is off -0.84% after accounting for the smaller carry forward the industry brought through transition to the new crop year. Uncommitted inventory is up +3.88% YoY, but handlers may be reluctant to reduce this further depending how the new crop matures.

Water Outlook

California reservoirs continue to be in a favorable position with all major reservoirs at or above historical averages for this time of year (Water.CA.gov). The mountain snowpack is about where it was last month from a historical perspective with the Northern region just below historical average for this time of year (97%) and the Central and Southern regions at 76% and 75% respectively (Water.CA.gov). A series of storms are set to hit California later this week with temperatures falling and an atmospheric river combining to bring significant precipitation to the valley and several feet of snow across the mountains (Weather.com). This should help solidify the snow pack and keep reservoirs well stocked.

Despite the recent wet weather, the majority of the Southern growing region remains in Moderate Drought (US Drought Monitor). This is especially impactful for those relying on groundwater supplies instead of surface water deliveries, especially as groundwater supplies continue to face increased regulations as SGMA gets implemented. Forecasted storms will bring needed precipitation to the region but growers in the region are still expected to face a tight water supply scenario come summer.

Bloom

Bloom has effectively come and gone with orchards turning green with newly emerging leaves as bloom petals fall. This year’s bloom avoided any widespread catastrophic weather event, but the season was often damp and cool. Average temperatures were broadly similar to last year across the state though cooler overnight lows and periods of active weather did suppress bee flight hours. That said, periods of dry and warm weather presented growers with sufficient bee flight time for adequate pollination.

Reports from growers continue to highlight a noticeably lighter bloom across nonpareil orchards. This has raised some concern about whether this year’s crop will be able to exceed the previous one. For now though, growers are in a holding pattern waiting to understand what will get set as we head towards drop. Concerns remain about potential effects from saturated soils after rain events and the impacts of undo stress this may cause trees, as well as, what impacts restricted nutrient and fertilization applications due to impacted operations budgets over the past few years may have on an orchard’s ability to set nuts. The growing season is just beginning and our understanding of crop potential is especially cloudy at this time. We will continue to monitor and provide context as the season progresses.

Market Roundup

India, the largest importer of California almonds, was off -5.5% from volumes seen a year ago in February. This amounts to about -1.5 million pounds. Buyers on the ground have been particularly active and we had anticipated a larger shipment figure. What the February figures tell us is that latent capacity within Indian supply lines remain and buyers will continue to need to come to California to resupply.

As a region, growth in other markets in South/Central Asia, including Bangladesh (+448% on the crop year), Kazakhstan (+251% on the crop year), and Pakistan (+118% on the crop year) been a welcome development. While these growth figures come off of small bases, the collective growth across the region suggests that there could be a shift in consumption habits occurring that could support continued growth in the region. While these markets share proximity to India, India has not been acting as a broker, so the added volume in the region is being driven by consumption, not shifting supply chains.

The economic environment makes it especially unlikely that shipments of almonds to China are to rebound any time soon. Volume direct to China is down -47% on the crop year. Some of this volume is being made up within the markets of Southeast Asia, which as a region, has grown +24% on the crop year. While the added volume has not offset the full volume that China is down, the region should continue to see additional growth.

North American trading partners have entered a new era of economic relations with the United States. Both countries have levied tariffs on each other, but for the moment, these tariffs have not specifically targeted almonds, nor have almonds been publicly threatened with tariffs. As individual markets, neither Canada nor Mexico rank in the top ten, but both do import significant volume. Collectively these markets have imported over 57 million pounds on the crop year and are up +4% YoY. While we do not anticipate tariffs targeting almonds becoming a reality, we need to at least acknowledge that the threat of this reality is no longer zero and such a reality could impact volumes to these countries.

Western Europe imported roughly the same volume of almonds in February that it did a year ago and remains just -3% behind in total volume on the crop year. While the region-view seems static, large fluctuations in volume within individual markets has been observed for much of the year. Spain, the largest importer by volume in the EU is off -15% on the crop year, while the Netherlands, as the second largest importer, is up +27%. In fact, nearly all markets in the EU have all seen double digit shifts in their volumes. Local almond production within Spain and Portugal also continue to grow and offset some needs from California.

The Middle East imported less volume than it had in the same month a year ago for the first time since August. Annual growth rates in the region reflect this long period of sustained growth with the region growing at a robust rate of +20%. Turkey and Saudi Arabia are both growing at a +55% pace and represent the majority of the volume growth in the region. The UAE, as the largest regional market, plays a strong role as a broker in the region. While the UAE is off -2%, markets like Iraq and Jordan have seen significant growth. This suggests that direct imports are displacing volume that previously went through the UAE. As a region, the fact that this growth continues in the face of increasing prices underscores the reality that regionally there is strong demand for California almonds.

Morocco has continued to rebound after a slow start to the year and is now up +20% on the crop year. This represents growth of over +6 million pounds. So far this year, Morocco has imported over 37 million pounds which is quite remarkable considering that it is an end-use market.

Market Outlook

Market activity continues to be fueled by hand-to-mouth purchasing and a lingering disbelief of the supply reality. Most supply chains are operating without much on-hand inventory. This has brought buyers to the market, but buyers who have grown accustomed to low commodity prices have been slow to refill supply chains as prices have risen convinced that another bumper crop like the 20/21 harvest that created the long standing oversupply scenario was just another season away.

At the same time, handlers have known for some time now that the current harvest was not going to support shipment growth over last year and have been equally cautious about over committing inventory. At the current shipment pace transition is already going to be tight. If harvest is delayed or light, handlers could be scrambling to fulfill their obligations if they have over committed.

And this is where the disconnect has been between handlers and buyers with handers concerned of a short supply and buyers convinced a bumper crop was just a season away. But growers understand that conditions need to be optimal for a bumper crop to materialize. With years of slashing operating budgets everything from pest management and fertilization, to watering and general maintenance has been anything but optimized. Factor in tightening water restrictions and the quickening pace of orchard removals, the skepticism is understandable. Now that a bloom has come and past that, while avoiding anything catastrophic, has been wet and cold at times and nonpareil bloom has been lackluster, it should be quite clear that a repeat of 20/21 is simply not in the cards. A yield more in line with the last two years seems much more plausible. An abundant harvest coming in to continue to suppress almond prices is not on the horizon.

That leaves just the demand side of the equation. Assuming shipments hold a similar pace to last year as they largely have this year, the industry is heading for another restricted transition. Almond prices have already come off of their lows, but demand growth continues to materialize. Emerging markets in the Middle East and Asia have been eager to take shipments when more established markets have looked to slow play and leverage their positions of volume. This has only worked to deplete inventories while California handlers have affirmed demand elsewhere for their products. as supply chains need to be resupplied there is going to be increased competition for product that is already trending towards short supply this summer.

Looking ahead, growers will need to harvest another 2.7-2.8 billion pounds just to maintain current shipment levels. Any squeezing done during transition will just increase the yield needed to rebalance markets. This means if yields fall a 100 million pounds or two under 2.8 billion pounds, real supply constraints are going to materialize well beyond the transition. The Subjective Forecast will be published in May. Until then much speculation will be made of the current bloom and growing conditions and markets will work to balance the perspectives. As we gain a clearer picture on eventual yields, expect markets to move accordingly.