26 May JSS Almond Market Update – May 2022
JSS Almond Market Update
May 24, 2022
Lots of positive data has been coming in from various sources over the last few weeks that has helped to solidify and homogenize the expectations for the remainder of this crop and the new crop to come at the end of summer. Good shipments, sales, and crop forecasts in agreement have all helped to stabilize the market and gives everyone involved the same baseline when thinking about supply and demand moving forward. Buyer and Seller confidence is most important in this market, and we have significantly more confidence across the industry than we had a month ago.
The 4 important pieces of data to review this month are: 1- The almond acreage report came in from the USDA and Land iQ . 2- The subjective estimate came in from the USDA. 3- external crop forecasts from Wonderful and Bountiful. 4- The April position report came in with strong shipping and sales numbers.
Acreage and Crop Estimates
The final Almond Acreage report for the 2021 crop came in from USDA at 1.320 M acres. This was slightly lower than anticipated, likely due to additional pullouts and leads to a yield per acre for the 2021 crop at 2.905B LBS/1.32M Acres = 2,201 lbs/acre – slightly better than anticipated.
The Land iQ report which estimates the 2022 crop bearing acres also came out on the same day and forecast a total of 1.338M acres with 60k acres having been removed over the last year. Fresno, Kern, and Merced were the top three counties with acres removed. We can now use with some degree of confidence the acreage number of 1.338 M acres as the base for crop forecasts.
The subjective estimate was released by NASS with an estimate of 2.8B lbs which lines up quite well with the Bountiful mid point estimate of 2.9B and the Wonderful estimate of 2.8B based on 1.34M bearing acres and a yield of 2,090 lbs per acre. This 2.8B lb number will be what the entire industry will work with for the 2022 crop until the objective estimate on July 8th.
In summary then, the industry is agreement on the bearing acres of 1.34M and an estimate of 2.8B lbs – this takes into account the reduced yield from the ongoing drought and the freeze which impacted the Northern part of the growing region quite severely and will likely reduce the nonpareil portion of the crop to below 2021. This is a similar scenario to that which occurred in 2012 – 2015 during which we also experienced growing acres, but lower yields due to drought conditions, and an overall crop that was essentially flat during this period. The primary difference this year is that groundwater is in shorter supply and no new well permits are being issued. This important and unprecedented factor should not be overlooked when planning your almond buying program for your 2022/2023 needs.
April Position Report
Shipments: Shipments for the month of April were very good and above expectations at 245M lbs. This is off just 2% from the 250M lbs. shipped in the same month last year. Further, we expect industry shipments for the rest of the crop year to be above last year and we are beginning to see the very real possibility of ending inventory below 800M lbs! This realization has led to a slight firming in the market for 2022 crop as no one is worried anymore about a 1B lb. carryout.
Domestic – April shipments were down 11% from last year and now down 4% YTD. There are many possible reasons for this slow down domestically, but no one is completely sure if it is due to inflationary pressures on the consumers, a post covid reduction in at home snacking, or something else entirely – perhaps the bar market is still lagging? At any rate we know that candy and overall snacking is still strong based on the retail reports and we expect the year will end strongly.
Export – April shipments were up 3% led by strong demand in India as Diwali shipments must come out of the current crop, Turkey which doubled the amount taken the same month last year, and the UAE up about 50% from last year.
Although YTD Domestic shipments are off 4% and Export is 17% behind last year, we expect very strong shipments the last three months of the crop year will bring the yearly shipment total very close to the record set in the 2021 crop. Quite an accomplishment considering the shipping issues, worldwide inflation, ongoing Covid lockdowns, and the conflict in Ukraine – all of which have impacted demand and shipping negatively.
Sales/Commitments: Sales for the month of April were robust and we are now 78% sold vs 85% sold last year at this same time. Due to the great sales and shipments we’ve been achieving, we expect the carryout will be much closer to 800M lbs. than 900 and we are hopeful the year end figure will be less than 800M.
Receipts/Crop Size: The receiving is 99.9% done and this years crop is set at 2.905B lbs.
Market Impact: STD-5’s in the current market are trading around the $1.75 level while new crop is at a .05/lb. premium at about 1.80./lb. Only in Nonpareil do we see the inverse with current crop NPIS at 1.90 and new crop bid at $1.70 with the same sort of spread on NP kernels. We expect this is a short term weakness in nonpareil due to the timing of Diwali this year and longer term we believe the nonpareil market will firm. Other items like SSR 27/30 AOS and std-5’s are still readily obtainable and will make up most of the carryout volume.
Going Forward Perspective
Now that we have the acreage and several crop forecasts within the same range, buyers and sellers are beginning to get on the same page and more and more business is being done. The wildcard that remains is the drought and what the ultimate impact will be on the crop now on the trees. One crop characteristic that we know the drought will impact is kernel size. Will Nonpareil be larger than last year due to the freeze taking off some of the kernels? Or will the sizes remain small due the drought and the possibility of a hotter than average summer. Only time will tell.
We know without a doubt that the cure for low prices is less supply, and that has begun to happen with this coming crop smaller than the last, and the 2021 crop smaller than the 2020 crop. Eventually prices will come back as supply growth slows and demand continues to grow, albeit slowly.
We are most pleased to announce that demolition has begun inside one of our old warehouses where a modern almond butter facility with the latest in food safe design and high tech equipment will be installed and up and running some time in Q1 of 2023. We look forward to serving the retail segment with state-of-the-art packaging as well as our industrial customer with pails and drums. We will also have the capability of providing custom formulas with stabilizers, sweeteners, and flavorings. Very exciting!
- Our new webpage is up at https://jssalmonds.com/ You can find out more about JSS almonds here on the website and also find links to our social media presence on Facebook, Twitter, Instagram, and LinkedIn.
Current Water Situation:
1-Reservoirs lower than Last Year, 2-Snow pack slightly better, 3-Groundwater availability is significantly worse.
Latest Almond and Water News:
> Much warmer and drier second half of May, and some thoughts about summer to come: https://weatherwest.com/archives/14786
> New research explores how farmers can help California rebuild its groundwater supply: https://www.kcra.com/article/new-research-explores-how-farmers-can-help-california-rebuild-groundwater-supply/39840234
> Northern California Ag not spared from irrigation cuts: https://www.farmprogress.com/water/northern-calif-not-spared-irrigation-cuts
> Dry Weather Forecast Calls For Higher Food Prices—And Billions In Farm Losses: https://www.forbes.com/sites/chloesorvino/2022/04/21/dry-weather-forecast-calls-for-higher-food-prices-and-billions-in-farm-losses/?sh=e754df83126b
Thank you for your support and feel free to call or email JSS Management with any comments, questions, or concerns.