Market Update
As of July 23, 2024, the heat dome in California continues to affect the region, with temperatures remaining in triple digits for the past two weeks. This extreme heat is expected to persist for another seven days before dropping to the low 90s. Almond growers are closely monitoring the situation as the harvest approaches, with irrigation still necessary for the trees. Harvesting is expected to start in the southernmost part of the state within the next 10 days.
Crop and Shipment Insights
Objective Estimate and Industry Response
A recent Objective Estimate has pegged the almond crop at 2.8 billion pounds, which is lower than the industry’s expectation of 2.9 to 3.1 billion pounds. Until the harvest is completed, the industry will operate based on this 2.8 billion pound forecast. Despite the lower estimate, the June shipment report was strong, recording 206 million pounds, up 10.5% from last June. The industry has shipped over 2.51 billion pounds so far, and with July shipments yet to be tallied, a carryout of less than 450 million pounds is possible. The limited availability of the current crop has been evident, with popular varieties and grades becoming scarce.
Current Stock Challenges
The strong shipments this season have put pressure on remaining stocks. Many popular varieties and grades are difficult to find. Processors running on final stocks may still have sporadic availability, so persistence in searching is advised. This year’s crop is expected to settle near 2.45 billion pounds, marking the lowest production in five years. However, the crop is expected to rebound this year, even if not to previously anticipated levels.
Almond Market Trends – Week 29
Bullish Trends
- Market Reaction: The market has responded to the Objective Estimate of 2.8 billion pounds with a 10% rise in prices for the new crop over the last two weeks. This trend may continue if demand exceeds supply.
- New Crop Sales: Over 271 million pounds are already recorded for new crop sales, more than double the sales from the same period last year.
- Current Crop Availability: The current crop is almost sold out, making a carryout of less than 450 million pounds very likely.
Bearish Trends
- Price Stability: Although bullish trends dominate, it’s crucial to note that prices won’t rise overnight without transactions to establish these new levels.
- Supply Gaps: With limited supply remaining to bridge the gap before the new crop, August and September shipments may be weak, putting the industry behind for the new crop year.
- Retail Price Impact: Higher prices may lead to reduced consumption as retailers raise prices at the shelf, despite not lowering prices when the almond market declined.
The almond market is navigating a complex scenario with the ongoing heat dome impacting the crop and strong shipment numbers putting pressure on current stocks. As the industry prepares for the new crop year, strategic planning and market adaptability will be essential. Keeping an eye on upcoming reports and maintaining flexibility in operations will be key to managing these dynamic conditions.
Source: OFI