Nut Talk

Almond Market Report

Dear Friends:

Yesterday the Almond Board released its final position report for the 2006 crop year showing 82 mil in July shipments—a new record. The industry shipped 1.066 billion for the year ending July 31—also a new record, passing the 2003 crop by 42 million. The final crop was 1.117 billion lbs with 1.083 marketable. That means we shipped the entire 2006 crop. In the coming year, we have a crop estimate of 1.330 billion—finally enough to allow market expansion. The big question is how much can it expand at current prices. The last time we had a crop near enough to cover the market without significant price increases was 2002 crop. In that year we shipped 20% more than the prior crop record and ended up with only 160 mil carry out. If we expand the market 5% per year from then to the 2007 crop, we would ship 1.250 billion lbs—17% increase over the 2006 crop. Here is a possible inventory model:
Carry in Aug 1, 2007 130 million lbs
2007 crop 1.330 bil x 97% 1,290
Supply 1,420
Shipments at 15% increase 1,220
Carry out July 31, 2008 200

This would be the largest carry out since the 1994 crop (25%+ carryout of ‘94 crop) but would represent only 15% of the 2007 crop. We have been carrying out about 10% of the crop, which you all know is not enough for a smooth transition. If shipments increase only 10% for the 2007 crop, we will have a carry out of 250 million lbs, nearly 20% of the crop. We have seen unexpected increases in shipments in the past and need to expect a big increase this season because of the available crop. Price fluctuations will probably be smaller this year because of the extra inventory available. Since 1994, inventories have been restrictive and not allowed full potential of market expansion.

Here are the factors that will determine the supply and demand interaction to determine the price for the 2007 crop:
How much will shipments increase over the record 2006 crop year, and will handlers be carrying out 15%, 20% or some other portion? I am concerned that space and cash flow limitations will cause many handlers to plan NOT to carry over this amount and they will put pressure on sales to reduce inventory.
Will the crop exceed or fall short of the 1.033 billion estimate. History leads us to expect more. We’ll have a good idea in Dec.
How will the 2008 pollination look in February? Some growers expect the trees to naturally back off after this big crop load. On the other hand, we will have the largest increase in new bearing acres in years—at least 70,000 acres more—more than a 10% increase.

Following are market prices—not much change from a week ago.
2006 crop August shipment 2007 crop Oct & later
Nonpareil Supreme 23/25 AOL $2.55 per lb. FOB California 2.25
Carmel SSR 23/25 AOL 2.20 1.90
Butte SSR 27/30 AOL 2.05 1.80
Cal Std unsized 5% 1.90 1.70
Nonpareil inshell 70% 1.55
Carmel inshell 60% 1.19
Peerless inshell 35% .75
Blanched Sliced 2.60 2.35

September prices are in between and will change each week as harvest gets going.

Harvest has begun. Shellers and processors are running the early receipts of 2007 crop and complaining about small sizes, which is usually a worry at the beginning of most large crops. Later we expect better sizing but for now most handlers are not willing to offer much larger than 25/27 sizes. Buyers will get what they need but may have to be patient for the offers. I expect to have a size distribution soon and will send it on request.

Please send comments and questions.

Best regards, Ned

Ned T. Ryan