OVERVIEW
Last month marks the second highest shipment on record for the month of September coming in better than market expectations. This falls behind last September by 13% but one must consider the industry landscape last year. Total shipments came in at 227.6 million lbs., down 33.3 million lbs. vs last year. Exports for the month were down 33.9 million lbs. or 21%, due to continued shipping challenges. The domestic market remains relatively flat, up 1% over September last year. Year to date shipments are at 435 million lbs., down 4% from last year’s strong start.
SHIPMENTS
The industry is 33% shipped and committed through the end of September, trailing last year by 11%. Ongoing shipping and logistical issues have been a major obstacle in repeating last year’s record strong start. India’s shipments for this August and September are down 12%. The current pace is still significantly ahead of 2019 and 2018 shipments to India and future demand looks strong. Europe’s shipments are currently down 7% as a result of strong shipments to fill warehouses at the end of the crop year, to assure supplies for the upcoming holiday season and to avoid shipping delays. The Middle East has also experienced lower shipments for the last two months and is down 14% YTD due to strong inventory in the market. An earlier date for Chinese New Year has resulted in a 16% increase in shipments to meet holiday demand. Lastly, the US market set a shipment record for the month of September despite being up only 1% year to date.
CROP COMMITMENTS
Commitments at the end of September total 720 million lbs., down 34% compared to the significantly advanced levels last year, though ahead of September 2019 by 8%. The industry remains behind in bookings given cautious selling due to drought concerns and the desire to limit offers across larger CPO’s given early results skewing smaller.
HARVEST
Crop receipts for September are slightly ahead of last year by 1.5%. The industry continues to see lower yields, quality variations, and a smaller CPO distribution reflecting the impact of above average heat and water limitations during the later growing season. At this stage it appears the industry is on track for a crop very close to the 2.8 billion lb. projection of the NASS Objective Estimate.
Market Perspective
Industry activity in the form of new bookings continues to lag compared to prior years. Drought concerns incenting buyers and sellers to cover shorter positions and early results skewing to a smaller CPO distribution has led to industry reluctancy in making nonpareil kernel commitments. Early spring buying, current full supply pipelines and shipping delays combined with longer transit times are impacting the demand in several export markets. Prices are sliding off the peaks obtained over last several weeks leading suppliers to search for short term demand in a market where buyers are already well covered. Prices are likely to continue to be challenged through October as the market tries to find the bottom. Despite recent softening, today’s market pricing remains significantly above levels at the beginning of last crop year.
It is early in the crop year and the expectation is for market activity to increase as the industry moves further through harvest. The impact of the drought is still a real concern. One would expect the industry to continue to move ahead in a cautious manner if these conditions persist through the winter.
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Source: Blue Diamond Almonds