Wednesday, November 12, 2014

Almond Shipment Report

We didn’t send out a report yesterday due to the Almond shipment report. After strong and in depth analysis we have some strong conclusions.

October shipments were released yesterday and the results are a gaggle of different signals:

-          Shipments were “only” 11% off last year’s record breaking numbers (204 million vs 228)
-          Commitments were “only” 13% below last year’s (458 vs 528)
-          Crop receipts 1.516 billion vs 1.385 last year (but harvest started earlier)
-          USA market up 8%, western Europe +2% (UK -9%, Germany +21%, Spain -18%, Italy +2%, Holland +42%, France -2%), China -44%, India +16%, Japan -26%, S Korea -14%, Turkey -20%, UAE -23%
Most Important
-          New sales for the month 276 million – This is the strongest sales month on record despite the historically highest prices ever.

Some important things to take note of. The Spanish Almond price drop is not related nor will it affect US crop pricing. Why did Spanish Almonds price drop?,  simply the European farmers are not “fat cats” and want to move product at this time. The crop has been OK and they are not in the same financial position as the California growers. They are not looking to increase yields to the same rate, rather happy with the current pricing and the desire to shift product and bring in some much needed cash. (typical Euros)

China has dropped significantly. Granted, but look at what has happened in India. Prime Minister Modi is intent on creating a new middle class, he has removed the red tape for importers (which was formally controlled by a few prominent families) this has led to a huge increase of almond imports 66%. Well either they have flooded the market or very cleverly have imported mostly unshelled almonds to forward sell, they can shell cheaply in India and can ship easier into the Chinese market (less import taxes). Even with the fear that these “rookie” importers are flooding the market, it will  have no real impact or adverse effect since they can’t ship it back stateside anyway. (Try getting past the FDA)

In terms of rain. Hardly any rain fell in October and so far in November and hardly any in the forecasts.
El Nino (wet winter) probabilities revised down to 55% from 65%.
The 2014 crop is now expected to be in between 1.90 to 1.96 billion down from the objective estimate of 2.1 billion hence growers/packers expect shipments to be down 10% on average every month in order to have a feasible carry-over for next year. I also feel that the growers have now given up hope of rain and are comfortable at these prices even without it (covering the cost of bringing in water). They are not really expecting it, this is evident in the recent signing to bring “drip irrigation” to the great state of California.

We think that we can expect prices to remain unchanged till the end of the year at least. For January onwards we are in the hands of mother nature (= rain or lack thereof)

So in conclusion:  The drop of 10% is not something to cause concern or to expect a price drop. We would need to see everything in the favor of the buyers for any real price drop, a tremendous amount of rain and a bumper forward crop. Neither of these seem on the horizon but am not GD (even if my mother disagrees :-) so impossible to predict the future but that’s our gut and conclusion based on what the reports & market research indicates.

Saying that some unsophisticated traders could read the report wrong and panic sell so some cheaper pricing will be available and we are seeing offers like that, but not from the actual large growers. They have gone out high and the domestic market have just accepted it and more, as evident by the 8% increase and the record breaking sales month. The demand for Almonds by the common man is strong (well done Almond Board)

I hope this is helpful, we shall be sending out a new price list tomorrow and can now offer the following Pistachios 18/20 R/S. 

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