June, 2011

Almond Industry Position report released today reported shipment numbers at a new record for May at 130,419,707 million pounds compared to last year’s 91,972,247.  This report solidifies that all world markets are consuming almonds, and one should not underestimate demand.   California setting its fifth month of record export shipments, up 66.2% over May last year.  Domestic market also continues strong with the third month in a row of record shipments up 29.5% over May 2010. What does all this mean?  Shipments for the 2010 crop campaign are ahead of last year by 12.5%, substantiating that California is on target to ship 1.65 billion pounds.  Thus creating a tight supply situation for transition, leaving a carry out of around 250 million pounds or 15% of total shipments.

Harvest is estimated to be running two weeks behind normal due to cooler temperatures.  In fact, today, the NASS Objective Estimate was postponed until July 6, 2011.  Late harvest will only add to the pressure of transition.  Our world markets will demand the for earliest possible shipments in order to accommodate the early seasonal requirements of the Diwali in India and the Chinese New Year, this year both being a week earlier then last year. 

Based on growing demand as evidenced by continued strong shipments, California is not afraid of a possible Objective Estimate of 1.85 million pounds.  In fact this is necessary in order to maintain price stability, along with continued growth.

Market Update:
Prices have continued to firm as a result of steady demand and continued strong shipments and commitments.  There does not appear to be a down side going into transition to new crop.  The 2010 crop is viewed in short supply and already some varieties and sizes are simply not available.  It is presumed the market is trading on the expectation the 2011 crop will surpass the Subjective Estimate 1.75 billion pound estimate.   This leaves the question as to why new crop is trading at a $.10 to $.15lb discount under the 2010 crop?  Looking ahead to shipment trends and potential carry outs, supply and demand seem to be in balance and if anything it would be a more reasonable argument that we may be headed toward an undersupply situation.  Unless the industries shipment growth trends discontinue, tight supplies and rising prices is what we see in the future.

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