November 2023 Almond Market Report
The November Position Report shows that California almond handlers shipped over 238 million pounds in November. This is the second highest rate for shipments in November on record and +16.6% above a year ago. Through the first four months of the crop year, shipments are up +9.6% on net. Export markets are fueling the growth, up +24.7% in November YoY and are pacing +13.9% on the crop year. Meanwhile domestic shipments slipped in November and were off -2.0% while they are off -1.1% on the crop year.
New sales in November did not keep pace with shipments as committed shipments fell slightly from October to just over 647 million pounds. Commitments currently on the books are now -6.3% YoY. Uncommitted inventory however is off almost -25% YoY and is a reflection of the late harvest that California saw.
Handlers now report receipts nearing 1.9 billion pounds ( -13.2% YoY) after Handlers processed 533 million pounds in November. This is +8.1% above what Handlers processed a year ago in November, but below what might be expected were Handlers continuing to deal with back logs in stock pile inventories from a late start to harvest. In fact coming from the Industry gathering a week ago at the Almond Conference, Handers are consistently reporting that they have caught up from a late harvest and are at or ahead where they were this time last year in working stockpiles. Considering that this time last year receipts represented 83.6% of full yield, being caught up on processing would mean that the industry would project just 2.2 billion pounds on the year. This of course would be in line with grower and Handler sentiment that has long took the position that the Objective Forecast was overstated at 2.6 billion pounds.
California’s Mediterranean climate means that the state sees virtually all of its precipitation between October and May with the bulk occurring December thru March. As the state enters its critical wet season, the State Water Resources Department announced its initial water allotment at only 10%. It should be said that, as recently as last year, a low initial allotment was raised significantly by the time late spring and summer came around, so little weight should be given to this figure at this time. However, it is a reflection of the current conditions and with a few exceptions, rainfall totals have been below average for the fall. Continued dry conditions could very well persist, though there is plenty of reason for optimism for a wet winter. We continue to see a strong El Nino in the pacific which has produced some of California’s wettest seasons. Widespread rain and mountain snow is also predicted to begin by the end of the week and persist in a significant way for much of the following week.
Reservoir levels are also strong for this time of year with nearly all of the major operations reporting water levels above historical average for this time of year. But Californians remember well that water fortunes can turn on a dime and even with El Nino, conditions can turn and continue to be dry. We do not anticipate water to be an issue this summer, but we will continue to monitor the water situation throughout the winter and spring.
It 'Bears' to Say
Land IQ released its final acreage report in November. The report shows bearing acreage increased by less than 32 thousand acres to 1,374,331 acres. Nonbearing acres however fell by more than 105 thousand. This highlights reports from the field that orchard removals are increasing while new plantings are not keeping pace. This of course is a reflection of the reality that commodity prices have continued to pinch growers while inflationary pressures continue to raise the breakeven point. Many growers are choosing other crops and reversing the long standing acreage growth trends seen within almonds.
Serious damage and rejects from widespread in-orchard insect infestations is the at the highest levels in memory. The Position Report shows rejects at 4.08%, nearly double the figure from a year ago This is an unprecedented figure and well above historical averages of 2% or less. Such an increase is yet another factor working to suppress yields as an additional 2% loss would represent 52 million pounds on 2.6 billion pound crop as forecasted and 46 million on a 2.3 billion crop should it fall below previous expectations. High rejects and serious damage could also lead to shortages in certain specs where certain varieties, sizes and/or quality parameters are overly impacted by high damage rates.
India celebrated Diwali with a lot of almonds. Or so the assumption is with its import data through the festive season. India is up on net +31% for the crop year importing an additional 38 million pounds in November topping last November by +14.1%. For added context, shipments could have stopped entirely in November and India would still have imported more Aug-Nov than it did a year ago (by the slimmest of margins). What is even more encouraging is that reports suggest that supply chains are still dry and that product is being consumed without inventories piling up. This has kept demand strong and suggests continued growth for the subcontinent.
Pent up demand that we speculated existed in China with the slow start to harvest materialized in a big way in November. A year ago China imported just over 9 million pounds. In 2023, it imported over 18 million doubling its importation rate. The largest increases were see in inshell product. Inshell had been lagging behind last year’s figures by larger margins than kernels and the accelerated buying of inshell was expected. Inshell still lags YoY while kernels are seeing growth. On net China moved from a pace of -23% annual growth in October to just -4% in November. Strong shipments should continue for China. Supply chains are still under supported with the slow start to the crop year. Now that inventories are available these markets need to be resupplied and California is poised to provide.
No one is perfect, so forgive us for not touching on Vietnam in our past reports. The country is up +94% on the year and has imported over 14 million pounds. Growth here seems meaningful and has proven resilient having posted YoY growth for 6 consecutive months dating back to last crop year. Other countries in Asia are seeing sizable growth figures on the crop year including Japan at +13% and South Korea at +30%. They have imported 23.6 million pounds and 17.4 million respectively.
Western Europe continues its strong buying pace and is now up +14% on the crop year. The Netherlands is up +41% and is pushing Germany for the #3 market in the region which itself is growing much more modestly at +3%. Italy and the UK, the region/s fourth and fifth largest importers are growing at +32% and +46% respectively. Spain, the largest single market in the region however is off -3%. We are projecting continued strength in this market as buyers continue to catch up from tight supply pipelines created by the late harvest.
The Middle East has fully rebounded from a slow start to the crop year with Saudi Arabia entering growth territory for the year (+17%) and the region pacing +12%. The UAE has now imported over 55.6 million pounds on the year which puts it on a comparable level to China (59.8 million) and Spain (58.2 million) which are all chasing India (159.8 million pounds) as the largest export market for California almonds.
Libya is an interesting development in Africa up +461% importing 8.4 million pounds on the crop year. Algeria is also up +57% importing 6.4 million pounds. This has more than made up for declines elsewhere in the region lead by last year’s start Morocco which is off -9% on 14.7 million pounds.
What is Ahead?
Shipment figures are likely to taper off in line with historical trends, but remain strong with supply chains still below capacity and buyers purchasing hand to mouth. Commitments are likely to keep pace with shipments as buyers continue to purchase hand to mouth.
Yield seems more and more likely to fall below the 2.6 forecast. Handlers and growers who were once projecting a 2.4 billion pound crop are now targeting figures even lower with 2.3 billion pounds the current over/under line for many.
Almond prices have continued a steady climb off of lows seen during the summer transition buoyed by a late harvest, questions over quality and continued strength in demand. Expectations of a shorter crop are likely to keep California sellers relatively quiet. Buyers on the other hand don't have supply chains flush with inventory as demand and consumption rates remain strong. This will force buyers to the table and will continue to put upward pressure on price. As receipts come into further focus this winter, a lighter crop and continued shipments on par with expectations will only continue to add to that upward pressure.