This month’s update is going to read like an extension of last month’s comment. Prices are NOT slowing down shipments, sales continue at a brisk pace while availability on current crop is tightening.
Coming in at the upper end of expectations, California handlers shipped a record 193.5 million lbs in January, up 16.7% from shipments of 165.8 million lbs in January a year ago. Year to date shipments are now 10.3% (115.5 million lbs) ahead of last year’s pace.
Reflecting worldwide demand, January shipments were helped by a broad swathe of contributions. Domestic shipments were up 2.9 million lbs (5%), Asia-Pacific up 8.6 million lbs (23%), Western Europe up 9.2 million lbs (18%), and Middle East up 4.3 million lbs (38.7%).
In Asia the January story is China/Vietnam, where shipments were 7.2 million lbs ahead of last year, showing increased appetite to meet post Chinese New Year demand. Indian shipments were slightly off last year’s levels, but still respectable given the huge shipments in October through December. Year to date shipments in the key Chinese (up 12%) and Indian (up 33%) markets are exceeding pre-season expectations.
Western Europe is also worth a mention. Year-to-date shipments up 10% (27.3 million lbs) in a mature market is reflects both the lowest pricing in Euro terms in years due to the weak dollar, but also consumer demand in snacking and as an ingredient in new products.
In the Middle East a significant reduction in the Turkish import duty to 15% encouraged January shipments of 4.9 million lbs versus 1.5 million lbs a year ago. We can expect Turkish demand to flourish at the lower delivered prices and also anticipate an increasing gateway to other regional markets.
Commitments were reported 601.6 million lbs. The change in commitments from the end of December suggest strong new sales of 174 million lbs in January. This is in line with what we have been experiencing as Europeans took advantage of the currency and Chinese buying came in for the second half of the season. Sellers look even more comfortably sold now than last month. The numbers show 81.4% of a 2300 million lb crop (less 2%) is either shipped or committed.
And perhaps the crop will not get to 2300 million lbs. January receipts slowed down more than expected, adding only 35 million lbs for a total of 2243 million lbs. In each of the past four seasons, less than 30 million lbs have been added after January. Anyhow, we now know essentially what we have and there is no surprise in the tail to help the tightening inventory position.
Subsequent to the strong December shipment report released a month ago we saw brown skin pricing jump about 5 to 10 cents per lb. Standards which were trading at just under $2.40 per lb prior to the report moved to the $2.45 to $2.50 per lb range. Cal SSR 27/30’s were most recently in the $2.60 to $2.65 per lb range. Nonpareils, which already had been enjoying very strong premiums, were a little less pronounced, adding about 5 cents per lb, with NPS 27/30 most recently seen near $3.30 per lb. Manufactured pricing was also relatively steady as aggressive sellers kept pricing from moving much beyond previous ranges.
Although bloom is attracting decreasing focus over the last several years (it seems we set a crop regardless of the weather) it is still a crucial time of the year. Depending on your perspective California has enjoyed/endured warmer than usual temperatures over the past two weeks. Mid-afternoon highs in the mid-seventies caused flowers to start popping in the nonpareil blocks a few days ago and by this morning we are seeing significant progress in our area. The outlook is for the weather to turn a little colder next week, but nothing significant to disrupt pollination activity. Budwood looks good and there is potential for a decent crop. With bearing acres increasing to around 1.1 million acres a crop in the 2.45 to 2.50 billion lb range would be reasonable.
The developing concern continues to be the lack of moisture. It has been a very dry winter thus far. Snowpack levels are 20% to 30% of normal and no significant storms are on the horizon as we move through what should be the wettest time of the year. Growers are anxious and water costs will increase.
So we have yet another bullish report, confirming strong shipments and also capping the 2017 crop at no more than 2300 million lbs. It is going to be a tight transition. Shipment growth has to slow over the remaining 6 months for the season. There is not enough inventory to maintain 10% increase in shipments. With commitments, already strong the relief valve is going to be higher prices to slow sales. Modestly firmer prices after last month’s report was offset by a weaker dollar and were not enough to slow sales activity. We are not going to predict currency movement, but all things being equal we expect almond prices to again move higher after this report.