No Black Swan
The Almond Board’s most recent report seems to signal market stability in the near term. The November report is an important one in accessing eventual crop yield. With a report of 2,041 Million pounds in receipts, the industry is virtually assured of exceeding the Objective forecast of 2,200 million pounds set in July. Our expectation of a final receipt near 2,400 million pounds is unchanged. Some in the industry have voiced an expectation as high as 2,450 Million. We believe the market has been trading on this expectation since Aug/Sept and thus we do not expect any major movement in response to the added clarity in crop size.
Demand Lends Support
We continue to see support for the current price trend. India has rebounded from being -16% off YTD in October to just -3% YTD in November. Europe continues to pace double-digit growth numbers with Spain and Germany leading the way as Europe’s two largest Markets. The Middle East is also particularly strong nearly double YoY. Domestic markets are down slightly, but stable. Seasonal shipments are up 4.6% YoY in spite of China signaling continued strong demand.
What’s on the Horizon
The Chinese market continues to be hampered by tariffs. Political uncertainty makes forecasting this market difficult. Should tariffs be removed, we’d expect an immediate and strong surge in demand for California Almonds.
There is still some uncertainty in eventual crop size. Should eventual numbers fall outside of the expected band, this would add pressure to the market with more risk of surge prices than falling.
You Pick the Scenario
We continue to monitor the expected end of the year Stock to Use Ratio as an indicator of Supply and Demand and its historical influence on almond markets. A stock to use ratio above 20% indicates Bearish pressures, while 15% and under tend to indicate a bullish trend. As your guess on eventual crop size and growth is as good, or better, than ours, we thought we’d introduce a new way to assess potential outcomes. Let us know if you like this new chart.