January 2025 Almond Market Report

California almond handlers shipped more than 228 million pounds in January according to the Almond Board’s latest Position Report. This figure is -3.1% below last year’s figure, with Domestic shipments off -2.0% and export shipments off -3.5%. Halfway through the crop year, shipments remain relatively steady and likely to pace last year's shipment figure, off just -0.53% from a year ago.

California handlers have now received 2.66 billion pounds from huller and sheller operations. The majority of huller and shellers have shut for the season and historically, very little volume is received February forward. Receipts are likely to top 2.7 billion pounds, but will not exceed the 2.8 billion pounds forecast in the July Objective Forecast. While crop receipts are up +11.48% YoY, total marketable supply is down nearly -1% reflecting the tighter transition period and the smaller carry forward the industry experienced this year.

Total Committed Shipments is down -10.33% YoY, but purchasing was strong in January with handlers adding over 238 million pounds in new contracts. That's the second strongest January on record. And despite net committed inventory lagging, California handlers have just +3.83% additional available inventory left to sell than they did a year ago.

Global Trade Uncertainty

The new US administration has been quick to make good on threats of tariffs, first imposing, then pausing (until March 4th) 25% tariffs on goods from Mexico and Canada; imposed a 10% tariff on Chinese made goods; then implemented 25% tariffs on steel and aluminum impacting historical trade partners in the EU, Japan and Australia (Reuters). This has created an uncertain economic environment where foreign governments and trade groups are threatening reprisals (Wall Street Journal). Thankfully, agricultural products, and almonds specifically, have not been the target of threats or retaliatory actions at this point.

How such a trade escalation could yet impact the almond trade is uncertain. While economic uncertainty and angst with the US’s largest trade partners may be exactly the leverage the US administration is looking for, business operators generally prefer more predictability. The immediate reality is that there exists risks that new tariffs could be implemented against American goods with little or no notice by almost any country in the world in response to the US administration's economic agenda.

Water

Water levels in California reservoirs are generally above average for this time of year (water.ca.gov). A series of atmospheric river events a week ago even prompted flood control releases from several major reservoirs, some of which will be captured downstream and pumped to other reservoirs (Shasta Scout). But the water situation is a bit more tenuous than all of that might suggest.

Precipitation has been largely focused on the Northern portions of California. While it is normal for the Northern regions to receive more precipitation than Central and Southern counterparts, precipitation events have been particularly aimed at Northern California. Weather stations in water basins in the North have routinely recorded more than 100% of historical rainfall between October and January, with the average closer to 120%. As you move southward, weather stations reporting 100% of average drop and by the Central Valley the averages are about 75%, then drop to 50% or below by the Southern portion of the valley.

You can see this dispersal pattern in the California snowpack as well with the North carrying 113% of average, Central 75%, and the South 53% (water.gov). Furthermore, the Central and Southern growing regions remain in some designation of drought (US Drought Monitor), though certainly in better shape than we saw a few years ago. While there are several months left in the rainy season, a reduced snowpack yields less snow melt that the reservoirs rely upon to replenish during the summer and persistent drought reduces ground water recharge and keeps water regulators cautious.

Federal regulators did recently increase their annual water allotment to 20%, which is generally in line with allocations made at similar times in recent years. Final allotments will depend on the outcome of the remaining months of the rainy season. However many growers rely more heavily on groundwater for irrigation needs and as SGMA continues to be implemented and areas continuing to experience some level of drought, many growers will continue to be impacted by water shortages regardless.

Bees-a-Buzz

The California Almond Bloom has officially begun with early varieties expressing their first blossoms and orchards beginning to turn white with flowers. Reports from growers have consistently indicated that bud wood on Nonpareil trees is not as robust as last year. With yields from Nonpareil accounting for roughly half of California's harvest, this could have impacts on future nut set and yields. On the other hand, California/Carmel varieties look better.

With an atmospheric river event less than a week ago and another one forecast for Thursday, growers have been busy mitigating disease pressures brought on by the added moisture. Temperatures have been on the cooler side as well suppressing bee flight hours; but, drier and warmer temperatures are on the horizon after this next storm.

The Almond Board recently posted a survey and requested for beekeeper input in response to reports of widespread and significant bee colony loss. Colony Collapse Disorder has plagued beekeepers in recent years and led to hive shortages during almond bloom. For now though, it seems that beekeepers have adequately prepared and are able to supply sufficient bee hives despite heavy losses.

Come March we will have a clearer picture of how bloom progressed. We will continue to monitor weather and field conditions that may impact the success of this critical period.

Market Conditions

Indian buyers continued their return to California markets importing roughly equal volume in January than a year ago (-0.7%). At the halfway mark in the crop year, India remains behind its import volume from a year ago by -18%. We previously discussed some of the reasons for this decline and noted that consumption demand within the country remains strong. India has also so far avoided any direct conflict in an escalating tit-for-tat trade war that the US has engaged in with other markets. That doesn’t eliminate the threat of economic turbulence from evolving US trade policy, but as the largest buyer of California almonds, it’s a positive sign for the moment.

Through the first half of the crop year, Western Europe has imported -3% less almonds from California handlers than it did a year ago. As a region, almond volume from California has been somewhat volatile this year, but volumes the last few months show the region still has a strong appetite for California almonds. Spain remains Europe's largest importer of almonds and has topped 81 million pounds of imports on the crop year. However, this volume lags -13% YoY. The Netherlands, EU’s second largest market, has enjoyed strong shipment growth on the year up +27% YoY and topping 70 million pounds. Italy now ranks as the 3rd largest European importer of almonds growing +6% on the year and taking advantage of Germany’s -22% decline. France has continued to grow and is up 4% overtaking the UK for the 5th spot. Demand for almonds remains strong in the region, but economic uncertainty with the threat of tariff reprisals between the US and EU could put almond shipments in the crosshairs.

Shipments into China continue to slip. Volume through the first half of the crop year is -44% behind YoY. Recent tariffs imposed by the US and a generally adversarial economic approach to China by the new US administration is only going to continue to suppress shipments of California almonds. At least shipments directly to China, as we have already seen a resurgence in value-added markets in Southeast Asia that can help supply the almond products Chinese consumers demand. Vietnam, Indonesia, Malaysia and Singapore have all seen significant growth this year and are playing a critical role in Chinese supply chains. However, the growth in these markets (roughly +13 million pounds) does not completely offset the approximately -33 million pound deficit in volume YoY in shipments direct to China. This highlights the reality that China is not just seeking volume through value-added markets, but is also supplementing through other almond suppliers.

Central Europe is growing at a +40% rate on the crop year and all but two markets (Estonia and Czech Republic) have imported more volume this year than last. While historically composed of smaller markets, the region’s growth equals nearly +7 million more pounds than a year ago. As the largest market in the region, Lithuania is up +92% and is importing on average more than 1 million pounds a month.

The Middle East has been a strong growth engine for California almonds. As a region, imports of California almonds are up +25% representing +39 million additional pounds from a year ago. Growth from the region has been largely powered by Turkey and Saudi Arabia as the region’s second and third largest importers respectively. Turkey has grown at a pace of +64% and has imported a total of 68 million pounds on the year, while Saudi Arabia has grown at a +65% pace and has imported a total of 18.6 million pounds. The UAE, as the largest market, has kept steady YoY and has seen 0% growth.

In October, Morocco had imported -40% less than it had at the time a year ago. Since, the North African nation has been buying almonds at a significant pace and now boasts a +18% growth rate on the year having imported over 29.5 million pounds. The questions about its ability to sustain the growth it achieved a year ago seem to be subsiding as once again Morocco holds a position of growth.

Outlook

The supply side reality has been in focus for the past two months with handlers targeting a 2.7 billion pound harvest. As we have pointed out in our previous reports, this supply reality allows for little shipment growth. This has generally raised the price floor as handlers have been less willing to overextend contracts and continue to sell below the cost of production.

However, some softening was seen in January as Handlers sought cash flow to support planned grower payments. As a result, handlers put a significant volume on the books in January. This has rebalanced the industry and handlers are going to be more judicious in selling forward volumes with Cal-Carmel varieties under the most pressure.

Almond harvest in the Southern Hemisphere is just beginning. It will take some time for almonds to make it to handlers and be readied for shipping. Markets with favorable trade scenarios with Australia will be eager to buy, but there may be added competition for volume if agricultural products come under fire in tariff disputes. Either way, Australian production is still dwarfed by California despite capacity increases in recent years and buyers will not be able to wholly supply their needs from Australia regardless of the trade situation. The hope of course is that almonds remain out of any possible trade dispute, but we can't entirely discount the economic uncertainty that the current political climate poses.

While bloom has just begun, there are real concerns about future crop size. Nonpareil bud wood suggests a lighter yield from Nonpareil orchards. This would significantly suppress the top end of possible yields. Growers are also continuing to operate off of last year's cash flow. With production costs continuing to surpass returns, budgets continue to be slashed. These impacts can be hard to quantify, but stretching fertigation events, pest applications and prevention work in the orchard is not going to result in a bumper crop. Added stress to orchards can also build up over time and require years of return to optimization before full capacity yields return. Weather and other factors aside, a large swing in supply back to an oversupply scenario seems rather unlikely in the near term.