Almond Market Tightens as California Crop Inches Lower and Acreage Declines

California’s 2026 almond crop is shaping up modestly smaller than last season, but the first decline in bearing acreage since 1995 and ongoing cost and water stress point to structurally tighter supply. Prices are edging slightly softer in early May, yet fundamentals argue for a firmer floor over the medium term. California remains the dominant global origin for almonds, and the newly released 2026 crop forecast at about 2.7 billion pounds, down 1% year-on-year, is broadly in line with recent seasons but masks deeper structural shifts. Bearing acreage has slipped to roughly 560,812 hectares as weak grower returns, high fertiliser and water costs, and groundwater restrictions trigger orchard removals and reduced management intensity. For European and Middle Eastern buyers, this means a more finely balanced market where weather, kernel sizing and water allocations in California will have outsized price impact into the 2026/27 marketing year.

Prices & Spreads

Spot almond kernel offers in early May show a mildly softer tone but remain well above recent multi‑year lows. US-origin Carmel SSR kernels (FAS Washington D.C.) are indicated around EUR 6.55–6.60/kg, with organic Nonpareil 27/30 near EUR 9.20/kg (FOB). Spanish Valencia industrial grades are trading closer to EUR 5.45–5.80/kg FOB, while premium Marcona and Guara types span roughly EUR 6.00–8.75/kg FOB, reflecting variety and size premiums.

Recent international market commentary confirms this gentle easing: Spanish Valencia and Guara types face the most downward pressure, whereas US Nonpareil and Carmel remain comparatively firm on tighter exportable surplus and steady demand from key importing regions. Overall, current prices suggest a market consolidating after previous lows, with only limited additional downside unless the 2026 crop surprises to the upside.

Supply & Demand Balance

California’s 2026 almond crop is forecast at 2.7 billion pounds, about 1% below the previous year, with yields steady at 1,940 pounds per acre. This volume is close to recent seasonal averages, but the structural picture is tightening: Land IQ estimates total standing almond acreage at about 565,753 hectares, with bearing acreage at 560,812 hectares, marking the first decline since 1995.

Returns to growers have been under pressure, staying below USD 2.00/lb in four of the last five seasons – often below full production cost. In response, orchard management quality has deteriorated in some areas, and more growers are abandoning or removing orchards entirely. This is particularly evident in groundwater‑reliant counties such as Fresno, Kern and Madera, which together account for nearly half of projected orchard removals for 2025/26. Over time, this accelerates the shift from surplus to a more balanced global supply.

On the demand side, Europe remains a key destination for California almonds, supplying confectionery, plant‑based dairy and ingredient industries, while Asia and the Middle East absorb significant volumes in the August–October shipment window. Against relatively stable global demand, even a modest 1% output decline – layered onto several years of squeezed grower economics and creeping acreage reductions – implies that effective availability may prove tighter than headline tonnage alone suggests.

Fundamentals & Cost Drivers

Production costs in California continue to rise. Fertiliser prices are estimated around 30% higher than a year ago, partly linked to geopolitical tensions in the Middle East disrupting fertiliser supply chains. Higher fuel prices and elevated groundwater pumping costs further strain margins in water‑restricted districts. These pressures limit growers’ ability and willingness to invest in intensive nutritional, pest and irrigation programmes.

Water remains the critical structural constraint. Current state and federal surface water allocations of roughly 30% and 20% respectively fall well short of what is needed for optimal orchard performance. Many growers are forced to rely on increasingly regulated and expensive groundwater, especially in the San Joaquin Valley. This is driving both higher unit costs and an acceleration of removals in marginal blocks, reinforcing the long‑term tightening trend in bearing acreage.

Weather and physiology added another layer of risk in 2026. Bloom was challenged by low chilling hours, elevated temperatures, reduced bee activity and rapid flower development, all of which curb pollination efficiency and nut set. March warmth may also have affected kernel size, a key determinant of commercial value. Crop development is running roughly two weeks ahead of the normal calendar, which could expose the crop to atypical late‑season weather risks and complicate pest management timing.

Weather & Crop Development Outlook

Through May, temperatures across coastal and central California have tracked close to seasonal norms, with only minor deviations, suggesting neither major heat stress nor cold damage at this stage. However, the earlier‑than‑normal crop development and prior bloom‑time heat mean kernel sizing and fill during late spring and early summer will be crucial for final yields and grade distribution.

Over the next 30–90 days, the market will focus on kernel size outcomes and any further tightening in water availability across the San Joaquin Valley. Additional cuts to surface allocations or localized irrigation restrictions could drag realised yields below current forecasts. Conversely, benign temperatures and adequate water in better‑supplied districts would support the current 2.7‑billion‑pound outlook but are unlikely to reverse the structural acreage decline already underway.

Market Outlook & Trading Guidance

In the 30–90 day horizon, the almond market is likely to trade a narrow range with a mild upside bias. The forecast 2.7‑billion‑pound crop, combined with shrinking bearing acreage and still‑fragile grower economics, argues against a return to the deep price lows seen in previous surplus years. Short‑term price dips driven by macro sentiment or currency moves should encounter buying interest from importers seeking to secure coverage ahead of the August–October shipment peak.

Over 6–12 months, the first recorded decline in California bearing acreage since 1995 signals a new phase for the industry. Even if the 2026 harvest ultimately matches current forecasts, continued removals and under‑investment point to leaner supply potential into 2027–2028. European processors and global traders should closely track updated NASS crop revisions, Land IQ acreage reports, water allocation announcements and any changes in fertiliser markets linked to Middle East developments, as these will shape both grower decisions and exportable surplus.

Focused Trading Recommendations

• Importers / Industry Buyers (EU, MENA, Asia): Use current mild price softness to extend coverage into early 2027 on core specifications (US Nonpareil, Carmel), prioritising size ranges most exposed to potential kernel‑size downgrades.
• Origin sellers / Growers: Favour incremental, scale‑up selling on rallies rather than aggressive forward sales at current levels; structural acreage decline and unresolved water and cost risks argue for maintaining some upside participation.
• Traders: Watch the basis between US premium grades and Spanish industrial types; a further squeeze in California exportable surplus could widen spreads in favour of US Nonpareil/Carmel into the new marketing year.

3‑Day Directional Outlook (EUR Values)

• US, FAS Washington D.C. (Carmel SSR, Nonpareil): Stable to slightly firm in EUR terms, with FX the main short‑run driver.
• Spain, FOB Madrid (Valencia, Guara, Marcona): Slight downward bias as domestic supply remains comfortable and buyers test lower bids.
• Key import hubs (EU CIF, Middle East/Asia C&F): Mostly steady, with selective strength in premium Californian grades where nearby coverage is light.