September 2023 Almond Market Report
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Top Line Figures
The September Position Report shows that California Almond Handlers shipped over 217 million pounds of almonds in September. This is a +15.5% increase YoY, but trails the record September of nearly 261 million pounds set in 2020. Over the first two months of the crop year, the Industry has shipped +3.1% more almonds than a year ago.
Domestic shipments lead the way seeing a +21.5% increase in volume than a year ago. Domestic shipments are +6.1% above last year through the first two months. Export shipments also improved over last year, up +13.3% in September YoY.
Committed Inventory is comparable to last year up just +1.2% YoY with over 674 million pounds currently under contract. New commitments observed in September were strong with nearly +270 million pounds hitting the books. The pace of new commitments in September was +13.3% higher than a year ago.
Handlers received +555 million pounds of almonds during September. While handlers have clearly begun processing their harvest at scale after maturity delays, Handlers were behind almost -140 million pounds from September a year ago. On net, the Industry is still -36.1% behind last year’s gross receipts at this time.
An Impacted Harvest
Last month, we reported many of the impacts observed during harvest, and these conditions persist. The delayed maturity, and thus delayed beginning of harvest, had many running as much as three weeks behind schedule. In recent years where weather remained dry well into the fall, growers would have had an easier time bringing almonds in from the orchard on a delayed timetable; but, mild weather, higher humidity and periods of precipitation have been much more common this fall throughout California.
This has further hampered harvesting efforts with additional steps required for conditioning and drying that had not been present in years past. Not only has this caused additional delays in many orchard operations, but it has further increased the risks of serious damage, mold and staining of almonds. And these issues are indeed showing up at hulling and shelling operations at much higher frequencies than in years past. Rejects are running high and potential supply issues within higher quality specifications and/or inshell products are only just beginning to appear on the radar for Handlers. A complete picture of the impacts will take time, but there could be further market developments in particular specifications, if not broadly across markets, as true supply scenarios are better understood.
India imported +17.6 million additional pounds in September than it did a year ago topping +51 million pounds for the month. For comparison, the second largest export market in September was China, who imported 10.3 million pounds of their own. Take a moment to understand that India imported five times the volume that China did in September! Through two months, India has imported +32% more than it did a year ago. This highlights the bottleneck that the subcontinent was feeling as inshell supplies dwindled through transition and new crop was delayed. Shipments are likely to remain strong as they continue to prepare for their holiday season.
China fell -8 million pounds short of last September importing 10.3 million pounds. Just over 7 million pounds of this shortfall was observed in inshell product. Two things could possibly account for this. One being that India buyers were more assertive and/or were the priority of handlers leaving little capacity available for China. The second could also be due to delayed harvest and China’s preferred inshell varieties still waiting to be processed. These two suggested rationales aren’t mutually exclusive either and could be influencing each other. What we’ll look for next month however is whether a rebound in inshell shipments to China is observed, especially considering its relative strength to close the previous crop year.
Western Europe paces +9% growth through the first two months of the crop year YoY. This was another region that, like India, we were speculating was under-covered as markets returned to traditional buying patterns and they entered the historical buying period for holiday production. The strong +12.8% growth YoY observed in September continues to support this narrative. Trends can be difficult to tease out through just two months of the crop year, but it is interesting to note that the UK has seen +94% growth through the first two months of the crop year reclaiming its stake as the 5th largest market in the region. Spain, as the largest market in the region is off -18% on the crop year, but had a similar shipment figure in September YoY. Germany, The Netherlands and Italy are all seeing growth YoY.
The Middle East imported about -2.5 million pounds less YoY in September, off effectively -10%. On the crop year, the region is down -23%. This is a region that once again is experiencing conflict and shipments could be further impacted due to instability in the region. A quick return to relative stability could continue to foster the markets and appetite for almonds that had seen significant growth over the past year. We continue to be optimistic that the region can maintain some of the gains it saw a year ago; however, the two primary markets in the UAE and Turkey are off -23% and -12% respectively. Emerging markets like Saudi Arabia, Israel and Jordan are all off by larger margins than the region as a whole signaling the real possibility that growth here may not be as strong or sustainable as might have been suggested just a few months ago. At a minimum, a realization that growth markets often experience volatility as they mature is a reasonable grounding to expectations of the future.
Lay of The Land
Crop yield is still a speculative endeavor at this time. A clear picture as to eventual crop size is still a few months off. However, beliefs of a crop size below the Objective Forecast of 2.6 billion pounds remains prevalent. Early season reports from growers have been coming in lighter than expected and with anomalous levels of serious damage, insect damage and stain/mold/water damage taking center stage in many field reports, there has been little to quell this belief.
Commodity prices have also been firming with many specifications seen +$0.20 or larger increases of the past month. Much of the Industry recently met in Cologne at the annual Anuga Conference and prices have only continued to firm. This at a minimum shows widespread reluctance from Handlers to over commitment at prices below current market levels continuing to push prices higher.
Buyers at Anuga reportedly found few if any offers for pollinator varieties. As handlers continued to grapple with a delayed harvest and sub-optimal weather there is clear caution about making commitments that handlers may not be able to meet. Simply lacking product due to harvest delays is one thing, but with reports of a complete lack of offers, there could be real supply concerns from handlers keeping them off the market at these prices. Either way, prompt deliveries of new crop pollinator varieties are likely to command a premium for at least the near term.
October has historically been the largest shipment month of the year. If we are to continue to see a shift back to historical buying patterns, a strong October would be likely to materialize. To do so India and the EU will need to continue to lead the way, and recent buying habits suggest this is a reasonable expectation. As pollinator varieties finally become available in larger quantities, pent up demand from markets seeking these varieties like the EU and China could further buoy shipment figures.
Domestic shipments may hold back some of the ceiling on growth however as we speculate that the growth observed in September may indicate stronger supply pipelines; but, US producers are also preparing for holiday production and will need to keep supply lines stocked. Global turmoil may also hold back growth, especially in emerging Middle East markets. For now, we’re looking to October for strong shipment figures. Shipments in the 250 million pound area would signal a widespread return to normalized buying and could be within reach. Confidence in a historical demand cycle would also bring clarity into demand patterns and allow handlers to better forecast future needs empowering them to be less reactive in periods where shipments would naturally fall off.