Cashews!

Market seems difficult and confused.  If you're not interested in the reading material, just scroll down to the bottom for a summary

1- Vietnam crop:

Because of the cold weather during the flowering, nut count is smaller and outturn is low.  But due to many new processors and likely very little stocks carry over from last crop so demand of seed is huge, there is too much competition to buy seeds. Seed price indeed have not come down, and even go up a bit.

Kernel seems to move in different directions, there are many offers of kernels from Vietnam, so kernels price is not going up. Situation became very difficult time for the processor because there is no parity.

Vietnam crop is now less important to processors like they used to be. We import more and more. Last few days, our staffs went to Cambodia from what they see, they feel and Cambodia crop is getting bigger and bigger. I do not really know how big Cambodia crop is but they export more and more to Vietnam.

Price of seed today in Vietnam is around 22,300-23,000 VN$ with low outturn.

2- West African crop:

IVC crop: IVC government is still controlling to price paid to farmers, and they do not allow export at low price. I heard they had cancelled the export license of some exporters because they were selling low price.  Because of this, IVC raw seed price remain stable and even up a bit.  At one time, IVC 48 lbs dropped to 950 USD/mt cnf Vietnam but are now up 10-20 USD per tons (traded 970-980 usd/mt cnf Vietnam for 48 lbs).  IVC raw cashew nut is the key important factor, as crop is so big (around 500,000 MT), so IVC price will affect price of Nigeria, Benin, Ghana, Burkina Faso, Guinea Bissau…..

One of the reason IVC price is stable is because of Vietnam. We are hearing that Indian crop is good, so Indian processors find price of IVC as too high, and they’re not buying much.  But Vietnamese processors are buying a lot from IVC.  Some Vietnamese processors like to gamble.  They will accept high price, but when the cashews arrive and if the market is down, they will try to find discrepancies in L/C and try to reject the cashews.  It happens all the time when market is down.(We don’t deal with these guys though)

It is reported that this year quality from IVC is good and big nut count (last year nut count of IVC was also big that's why supply of WW240 was good).  I do not hear any bad news about crop in other countries like Nigeria, Burkina Faso, and Ghana. Guinea Bissau crop will only start later.

If everywhere crop is good, I do not know how IVC government can hold the price of seeds.

3- Processing in Vietnam:

Still good… Very good.  That's why there are a lot of offers of kernels.

4- Vietnam domestic market of kernels. 

Market seems to be stable, not coming down like last few weeks. I think because price is reasonable so demand is good, that's why price stable.

5- China market:

After the lunar New Year, demand seems to be good.  But they are beginning to follow Western buyers, which is to pay less price for WW320 because of good supply from Vietnam. They still buy a lot of LBW and DW because lower price. China does not buy much WW240.  Normally China will reduce buying in April, May when the weather getting warmer.  Chinese buyers are complaining that the currency(RMB) is dropping fast against USD, so price become more expensive. This can affect their purchase from Vietnam.

I will be going to China in Mid-April to visit some of our buyers, then I will know more about China market and demand.

6- Western market:

Because of so many offers from Vietnam, buyers seem not in a hurry to buy and only buy if they feel price is cheap. It looks like offer will be more in April, May, June, July.  If packers suppose selling at same level as today, can Western buyers absorb the increase in quantity from Vietnam??? Or they need a lower price to push demand???

So in summary, this is a difficult time for processors, paying high price for seeds and selling kernels at low price. April, May, June might be more difficult for sellers because they need to sell bigger quantity then same period of last year. If price fall, they may face big problems.

In the past, most companies lost money mainly because they purchased raw seed at high price, like:

Fatimex: bankruptcy, mainly because they purchased seed at high price and bad management

Lafooco: down mainly because they purchased and a bit high processing cost

Nitagrex: down because they purchased seed at high price although they enjoy low processing cost

Pygemaco (Pycasco): down because they purchased seed at high price although they enjoy low processing cost. Their management wasn’t very bad.

Nam Long: same problem, purchased seeds at high price.

So for most packers in Vietnam, the main problem is purchasing seed at high price. Other problem is management and high banking interest (but if high banking interest will affect all packers, not just few)

It does not mean that when you purchase seed at high price, the international buyers need to pay you high price for kernels. This is wrong thinking.

So we will see if:

a) buyers will pay higher price for kennels to have parity for processors

b) Raw seed price has to come down for parity

c) processors is making wrong decision to pay high price of seeds and will suffer.

In the interest of saving time, I'll just sum it up this way

Packers/Sellers are asking for higher pricing, because of high prices of RCN.  Buyers are very hesitant to buy at current level, because.... heck, it's a down market!!

It's a dangerous game "chicken" that they're playing... seeing who'll budge first.  The best advice anyone can give right now is "Keep your head down and your eyes/ears open".  When the market bottoms out/hits the floor, you can give me a call(or if you need spot shipments right now)

- Thomas Kim

February Walnut Shipment Report

Walnut Shipment Report

YEAR TO DATE SHIPMENTS- Shipments through February 28^th of 2014 were -0 .5% overall compared to last year.  Total Shipments are 333,020 In-shell equivalent tons.

EXPORT SHIPMENTS- Shipments are up compared to last year. Current year to date export shipments are 230,850 In-shell tons; compared to last year at  229,845 In-shell tons,  representing -0.5%.

DOMESTIC SHIPMENTS- Shipments are down compared to last year at the same time. Current year to date domestic shipments are 102,163 tons; compared to last year at 104,624 In-shell tons, representing - 2.35%.

     U.S. – The domestic market was slightly down for the month of February on kernels and In-shell. Canada was slightly up on their kernel shipments.

     Europe- Once again had strong shipments in both In-shell and shelled categories. Italy and Spain both had terrific shipment numbers. .

     Middle East/Africa – up in both categories for kernels and In-shell and up for the month.

     Asia/Pacific   - Was down on In-shell and up on Kernels. China shipped more kernels than they did last February. Year to date volume for China/Hong Kong is down.

CROP RECEIPTS- Receipts are 488,844 In-shell tons as of February 28^th, 2014, which should represent the entire crop.  The CASS Crop Estimate is at 495,000 tons. 

SOLD POSITION- Most industry experts believe the crop is 90-95% sold  or committed.

Demand has been steady from many markets around the world.  China is not as active as last month as they have shifted focus to Chilean walnuts.  

Prices look to remain very firm until new crop due to a lack of inventory in California. Most of the remaining inventory is pallet amounts with limited full container/truckloads of single items remaining. It appears packers are extremely comfortable with their sold position. We do not expect to see any changes in pricing for the remaining inventory of this crop. If prices do move we believe they may increase slightly as we approach the summer months.

WATER-  California has had two excellent storms over the past couple weeks. It has provided much needed water; however, we are still need of much more. It has given temporary relief to farmers and allowed them to shut of their pumps and not irrigate. California is still in a drought situation, one thing to keep in mind is the rain in the recent storms have been warm and provided very little snow pack. Snow pack is essential for summer water needs.

We will continue to keep you updated on new crop as the season progresses.  

Yes.. we've had two storms.... "but!..."  There's always a "but"... isn't there?

We'll try to keep everyone updated.

-Thomas Kim

February Almond Position Report

The Almond Board of California has announced the February Almond Position Report with shipments of  +149.3 million pounds compared to last year +160.0   million pounds for a decrease of -6.7%.

February Shipments:

-          Domestic shipments were +26.1%    +54.47 million lbs

-          Export shipments were -18.8%    +94.87 million lbs

-          Overall -6.7%     +149.3 million lbs

YEAR TO DATE SHIPMENTS:  +1.219 billion pounds compared to 1.176  billion pounds last year for a +3.66% year to date.

CROP RECEIPTS: The crop receipts are now at +1.99 billion pounds.

BLOOM: The bloom has basically finished.  Nonpareil had good weather, however, it did endure a long bloom and the initial report are the NP bloom was spotty.  Early pollinators had excellent weather overall.  The late pollinators did endure some rain at the tail end of the bloom which will be a concern for the Butte/Padre, as they were at 50% bloom when the rains occurred in some areas of the valley.

RAIN:  California has received a few nice periods of rain showers during the past 15 days to bring our annual rain fall up to approximately 45% of its normal levels for year to date in the Sacramento area.  We are at 36% or our normal full season rainfall totals.  We are still in a drought situation which will become a bigger issue in May/June/July when growers are required to make heavy irrigations.

MARCH SHIPMENTS: We expect the March shipments to be similar to slightly down compared to last year.

SPANISH BLOOM:  Spain has had an outstanding bloom condition and the trees are set to make a potential record crop of 60-70,000 tons.  As you will recall, this past year Spain had one of its worst crops in recent years only achieving 27,000 tons.  Thus the trees in Spain were well rested and are ready to produce this year.

PRICES: Almond prices have decrease approximately 10 cents per lbs on selected items during the past 4 weeks, as California started to receive a few rain showers to assist with its drought situation.

This is a good news for the buyers... at least until another "crisis" occurs to drive the market pricing through the roof!

Almond Gold Rush

Source : BBC News
Author : Peter Bowes
February 11, 2014

It has been likened to a modern-day gold rush. The growth in the popularity of nuts as a healthy snack has seen a boom in business for California's almond farmers. Eighty-two per cent of the world's almonds come from America's Golden State, where it is the leading agricultural export.

"Nut crops and almonds particularly have risen in value as the world has realized the nutritional value of eating almonds and how good they are for our bodies," explains David Phippen, a life-long almond grower in the prime agricultural area of central California.

Phippen's solar-powered farm is a partnership between five families. It is one of the first in the world to use robots, designed using NASA technology, to sort good almonds from bad.

It is a highly mechanized process with sophisticated irrigation systems in the orchards but, above all, almond production is dependent on the climate.

The region - which is about a 90-minute drive from Silicon Valley - is one of the few places in the world where almond trees will grow.

It has the perfect combination of a cold - but not too cold - winter, which allows the trees to lie dormant, followed by a mild spring that encourages them to wake up and bloom.

Crucially, the trees need about 500-700 hours of dormancy followed by a frost-free period when they burst into life - usually around Valentine's Day.

Farmers like Phippen have responded to the global surge in business - especially from the UK and emerging markets like China and India - by expanding their orchards.

"The value of each kernel has gone up dramatically and growers are looking for the best return on their investment so they're still planting almond trees at an alarming rate," he says. "If you decided to plant an orchard right now, you would wait two years for available root stock to actually plant."

"In the early- to mid-90s, nuts in general and almonds in particular were felt to be unhealthy because they had so much fat," says John Talbot, vice-president of global market development for the Almond Board of California.

But he says research has shown that the fat content of almonds is a positive attribute.

"It's the good fat, it's not the bad fat," he says, adding that a greater understanding of the positive role of monounsaturated fats has changed people's perceptions.

Good fats, such as monounsaturated fat, have been shown to have a beneficial effect on the body, decreasing the risk of heart disease and improving blood cholesterol. Harmful fats include saturated fats which come mainly from animal sources of food. They can be found in processed foods and have been linked to raised cholesterol levels and cardiovascular disease.

In recent years the almond industry has seized on the health-promoting qualities of the nut. Marketing campaigns have resulted in a steady but significant growth in business.

A print and online advertising campaign in the UK in 2012 positioned almonds as the "on-the-go essential snack". A Young at Heart campaign in China focused on the idea of "perpetually feeling good", while mothers in India were fed the message that almonds would help their children succeed in whatever they do. In the US, with slogans like The Crunch That Keeps You In The Game, the Almond Board of California has promoted the "crunch power" of the nut to physically active consumers.

Independent research appears to support the broad claim that almonds are a healthy food choice.

Researcher and registered dietitian Dr Michelle Wien has been studying the health benefits of almonds for over a decade. In one study, at the City of Hope National Medical Centre in Duarte, California, Wien discovered that when the nuts were incorporated into a weight-loss programme, dieters lost a greater percentage of their body-weight than those who did not eat almonds.

"They have a good amount of fibre, they are the highest protein-containing tree nut and my patients reported that they enjoyed the crunch and the chewing of the mastication process when they were consuming the almonds," explains Wien.

She says almonds have the effect of making people satisfied and less hungry for longer. It is a finding that has been observed by other researchers.

In another study, Dr Wien set out to evaluate the effects of almonds in people with pre-diabetes. She found that after 16 weeks, individuals who were consuming approximately 43-57g (1.5-2oz) of the nuts per day, had improvements in their bad cholesterol levels.

Wien, who works with diabetes patients, says almonds have qualities that make them a valuable ingredient in a snack.

"Since almonds are high in fat, they will reduce what's called the glycemic index of the snack," she explains.

"If you pair something with a low glycemic index, which would be the almond, with the higher glycemic index food, which would be the fresh fruit or a cracker, then you're going to minimise the rise in blood sugar after the snack."

Buying almonds in bulk makes sense financially. But consumers should be aware that gorging on the nuts is not to be advised. A single 28g (1oz) serving - about 23 whole almonds kernels - contains 160 calories and while each nut carries a powerful nutritional punch, they should be eaten sparingly.

Research suggests that each kernel should be savoured, individually, to realize its nutritional benefits.

One study concluded that an almond should be chewed 25-40 times to optimise its satiability factor. Prolonged chewing of the nut aids the release of nutrients into the body.

The cost of almonds has almost doubled over the past five years. In fact, the crop is so valuable, it has attracted a new breed of thieves. Nut-nappers, as they have become known, have been making off with produce by the lorryload, leaving a hefty dent in the profits of some growers.

A truck piled high with nuts can be worth well over £100,000 ($160,000) and it is a tempting target for the opportunistic thieves. There has been a spate of thefts in recent months, although it is a problem the industry has faced for a number of years.

"Two truckloads of almonds that were processed and ready for shipment were actually taken from our facility by people not authorised to take them," says Phippen.

"When something is worth a lot, there are unscrupulous folks that would like to have it for nothing."

The industry has hit back through increased vigilance among workers on the farms. Over the past year, new checks have been put in place to ensure that freshly processed loads are not stolen from under their eyes.

"We thumbprint and take pictures of the driver, we take pictures of his licence, take pictures of the truck, we document in so many more ways than we used to, so the trust factor is being challenged a little bit and to me that's a little bit sad," says Phippen.

The close-knit industry, with mostly family-run farms, has also developed an online community where word spreads rapidly when nut-nappers are in the neighbourhood.

The local authorities have been successful in tracking down and prosecuting many of the thieves. In a recent case a man was jailed for a year after admitting his role in the attempted theft of almost 20 tonnes of almonds.

The Almond Board of California says the theft of nuts does not pose a major industry-wide problem. A more ominous threat is the growing water shortage in California. The state is suffering its worst drought since records began, over a century ago. There has been very little rain for the past three years and reservoir levels are dropping.

"They're at the lowest level we've seen for this time of the year probably in my lifetime," says Phippen.

"Could we survive a fourth year of drought is the question and the answer is, 'I don't know,' I haven't tried that yet and we just don't know what Mother Nature is going to provide between now and then."

As for the price, there is no sign that nuts will become a cheap snacking option, any time soon. Demand is growing but supplies are limited and the drought could fuel a further short-term increase.

"It's really a matter of supply and demand," says Talbot.

"Compare (nuts) to other foods and they are more expensive than potato chips and more expensive than pretzels. People willing to pay a little bit more because there is a greater nutritional value - it is the perceived value of the product."

Nuts!

Pistachio

Market remains unchanged... meaning that pricing is high, and doesn't seem to be coming down any time soon.  

And then, there is the drought

Almonds

The Market has been very quiet the last few weeks after the shipment report.  With the bloom inspection looking fair to good, the pricing have softened somewhat(it doesn't mean that it dropped.).  The market is reacting to not only lighter demand, but the fact that 2013 crop receipts will be 2+ billion lbs(whatever happened to 1.89 billion lbs estimated last year?) 

And then, there is the drought(Hmm...)

Walnuts

Not much have changed in terms of pricing or demand.  China is still a bit quiet and haven't been making any major moves. Pending any disasters, the industry is expecting record crop for 2014 from all the new plantings, but...

And then, there is the drought(Does this sound familiar?)

Pecans

While there is no official report of the 2013 crop size, most in the industry believe it will come in under 180 million pounds (81,500 MT). This is mainly due to rain causing heavy damage to the group in Georgia and other southeast growing regions. Demand was strong last week for inshell into China with a large portion of the remaining inshell inventory being sold in a relatively short period of time. The price gap between halves and pieces is shrinking.

Water : I know that this may come as a shock to everyone... but there is a drought in California right now(Yeah... media, press releases, blogs have all been quiet on this one.  Please add your own healthy dose of sarcasm...) With zero allocation on water, there is still water enough for this year's crop.  It will just cost the growers a bit more to get it.  Next year, however, may be a bigger issue.

I remember last year, it was the "Not enough bees to pollinate!!  OMG! We need to raise the prices!'.  The year before that, it was the "There's frost damage!! OMG! We need to raise the prices!".  The year before that... Is it just me, or is there a pattern?  You know, if you cry wolf too many times....

-T. Kim

Dehydrated Fruits

In general, the weather in Thailand is moving to summer period after long time cool temperature from last year. A lot of plantation area currently does not have enough water supplies for their plants especially in the North and Eastern part of Thailand. Thai government report that the drought situation this year will become severe if there is no rain during these couple months.

Please find below our market update for your reference.

-          Pineapple quantity is reduced as per our estimation. The main season is already finished. Pineapple raw material price is starting to increase now due to shortage period. The second crop will available again during April-May/June (small crop). However, the crop size will depend on the water / rain as well. Please consider to build up pineapple in inventory before June. Expect price will be slowly increasing according to market.

-          Pineapple core, there is no improvement of Pineapple core situation same as Pineapple. We still confirm our recommendation to consider in building up inventory for Pineapple core product before off season. Price adjustment will be need as raw material price increase. We expect shortage from June-October. New coming season will be in October.

-           Papaya natural red, our production managed to find suitable supplier per our required quality during January. However, the season of Papaya is about to finish so we can only buy some quantity to average our cost this year. We are currently bringing down our offer price for natural red papaya to reflect our cost. Please consider master contract for this season accordingly.

-           Papaya raw material for color added, price remain high compared to last year. We expect raw material should be shortage before new coming Papaya crop in late August / September 2014.

-          Mango, season will start in late March / early April. We will keep you posted on mango situation again during March. Our inventory of mango should be able to cover our usage till the new season arrives. We estimate availability should be similar to last year as season arrive earlier. We also expect the price will be stable as current pricing.

-           Ginger, due to we received high demand of ginger from various customers this year. Our current raw material in inventory is already near finish. We will have to put our offer on hold during this period to recheck our stock. New season of ginger will be in August. Quality and crop size still not yet known. We will keep the market posted on ginger accordingly.

-          Cantaloupe, season is about now. Price still firm at high level.

-          Kiwi, due to high demand of kiwi order from last couple months, we expect that some shortage may be seen before new kiwi season in October.

-          Strawberry, raw material in our inventory is now finished. New strawberry season will be in June / July. First available shipment will be in August / September. Will keep you posted soon after we received update information on this item.

  

External Factors

·         Unease political situation in Thailand still keep on going. The new election is still not success with many obstructions. Farmers also have consequence effect due to shortage of money from the government project on the rice policy.

·         Many government offices cannot operate their work as normal situation due to protestors try to close the entrances and not allow officers / people to get into. However, the business activity still keeps on going as usual. Only some delay in getting document from government office may be seen in certain period.

·         Thai Baht fluctuates between 32.20-32.80 THB/USD. This may help in slow down the price increase.

·         Freight rate still stay at high level from January 2014.

There are more market updates available on apple, star fruit, peaches, guava, coconut, etc.  There was too many for me list here.  If you need a specific market update, please contact me directly.

-T. Kim

Just how much water...?

Please find below, amount of H2O required to cultivate...

Below is the current "Drought Monitor", detailing how bad each region is.

And if we check the growing regions...

It all adds to "you need to open your wallets a bit wider" at the grocery checkout lines... either that or "No, you can't have a bag of walnuts for your snack... how about some Twinkie?"

Flooding

Bolivia flooding conditions

Brazil nuts will not be shipping out anytime soon.

So... drought in California, flooding in Bolivia, and I'm getting snowed in New York.  Is it just me or does it seem like we're getting more of these now?

Farmers vs Tree Huggers

This is sure to cause flames....

... Reduced water allocations will also have an impact on school and governments in the Central Valley, said Fresno County Supervisor Phil Larson, by leading to farm workers leaving the valley and taking their children out of the schools. Reduced farm spending will also mean less revenue for local businesses and reduced tax receipts for local governments.

“I can tell you right now the biggest threat to farming and industry in California is the Endangered Species Act,” he said. “They can declare a critter endangered whether they see it or not. They say you have the habitat so it must be there, and you must mitigate it. Then they ask the farmers to pay a penalty because they can’t farm that land. How can that be right?

Larson agreed the Central Valley needs the water from Temperance Flat Dam. “I had a reporter tell me we did not need storage because we were going to get all this rainfall from climate change. I told him you made my point because we need to be able to capture that rainfall when we get it, and for that we need storage.”...

As handler/member of the food industry, I see and understand the plight of growers and farmers.  This is their livelihood and they need to put food on the table for their family. (Although in case of almond growers, it's a choice of paying off their yacht, or buying that second vacation home in Belize)

With the amount of damages that we've caused the environment so far, I am not sure if backtracking on our environmental/conservation laws are the best option.   

-T. Kim

Cashew Update

Indian and Vietnamese cashew market remains very quiet, with poor demand and sales for kernels.  Prices remain stable and there is a whisper of news that kernel prices may weaken below the current level as the harvest season approaches.

There are big lots of new seeds that are coming out to the market(RCN : Raw Cashew Nut), but the price is too much for the processors to pick up.  The RCN has hit a high record and it is very risky for packers to cover when the kernel market is weak

Well, at least there's SOME news.  Cashew may be only nut that's declining in pricing right now... instead of pecan pie, how about some cashew pie!...(someone should really come out with a recipe for that)

-T. Kim

Walnut Shipment, January 2014

WALNUT MARKET/CROP REPORT

  

CROP:

The final California 2013 walnut crop has been set at 490,554 tons, 5,000 tons less than the 2012 crop.

The Chandler crop came in at 226,055 tons compared to 207,413 last year. Howards was 69,577 tons compared to 60,259 tons from the 2012 crop.  The Tulare tonnage was 63,235 tons, about 4,000 tons less than last year.

As expected, the Hartley crop was down about 5,000 tons (52,089 tons) which I believe is a record low tonnage in decades.

It is still too early to report on the upcoming 2014 crop but there are some concerns regarding the California water conditions.  Although the Central Valley received a nice storm last week which resulted in several inches of rainfall, California is still more than 50% of normal.  However, there is another weather front forecasted for this weekend and hopefully, we will see some additional rainfall from this storm also.

Again, not sure how the drought will affect the 2014 crop, but it would be a good guess that it will not help...

January inshell shipments were 22.9 million pounds, up 2.7 million pounds from last year. Shelled shipments were 25.6 million pounds, down 1.3 million pounds from last year. Total January shipments were 40,308 tons (inshell equivalent) compared to 40,451 tons last year

The total year to date shipments (inshell equivalent) is 299,845 tons, compared to 293,135 tons at this time last year.

With the current shipments about 7,000 tons ahead of last year, and the fact we have 5,000 tons less tonnage, I see no reason we should not sell this year’s crop by August.  If so, this would again give us about 49,000 ton carry-over, which is about what we need to fulfill September commitments.

   

Walnut Shipments Recap 

Month (Jan)            2012/13      Year to Date      2013/14     Year to Date     Percent

In-shell (lbs.)             20,389            247,830              22,923      263,608             6.3 %

Shelled (lbs.)             26,867            150,267              25,558      148,884            -0.1%

Total Tons               40,451             293,135             40,308       299,845             2.3%

MARKET:

Basically, the walnut market has been floating the past month or so, with very little movement one way or the other. I believe this trend will continue…that is unless China comes back in heavy after the Chinese New Year.  In any event, the strong January shipments will also help solidify the market which I believe will stay status quo, at least for the next month or so.

Inshell Jumbo/Large chandlers are trading on both sides of $2.23, with Tulare’s/Howards still in the $2.10 to $2.15 range. Jumbo/Large Hartley inshell are on both sides of $2.05.

Chandler LHP 20% on both sides of $5.00, depending on the packer’s inventory position.   LH 80% still around $5.45.

Regular LHP is trading at $4.80 with CHP getting close to $4.60.  With the additional availability of inventory of Medium and Smaller material, the prices are now about the same as the halves and Pieces market. 

As for the forward market I don't believe the market will move much one way or the other that is unless China comes back with heavy bookings...

c/o Pete

My thoughts on the walnut market : 

They've learned very well from almond industry... They, along with all the other agri-industry in CA, will be riding the threat of "drought" and "China", all the way to the bank.

Current expectation is that we may see a repeat of last year, IE rising prices during summer season due to "lack of availability".

-T. Kim

Almond Shipment, January 2014

Please find the shipment numbers from January 2014

Domestic Shipments for the month were 52.25mm lbs. or +17% of Jan.’13 shipments which totaled 44.65mm lbs.

Domestic Shipments crop year to date were 317.9mm lbs. or +12% over previous crop year shipments of 284.9mm lbs.

Export Shipments for the month were 108.0mm lbs. or -3% vs. Jan.’13 shipments of 111.9mm lbs.

Export Shipments crop year to date were 752mm lbs. or +2.8% vs. crop year to date last year shipments of 731.4mm lbs.


Total industry shipments for Jan.’14 were 160.3mm lbs. or +2.4% of Jan’13 shipments which totaled 156.5mm lbs.

Crop year to date shipments are 1,070 billion pounds or +5.3% of last crop year to date shipments of 1.016 billion pounds.

January’14 shipments were a record for January and the 4th monthly record this crop year.  Year to date crop receipts are 1.98 billion lbs.

Crop is approx.. 67% sold, which is just above the 5 year average of 65%.

I had a interesting email from one of our suppliers...

Me : ... Please advise on what effect will this(report) have on prices

Vendor : ... Up Up and Away~!...

Well, I'm glad that one of us is happy about the rising prices...

-T. Kim

HR 3964

c/o Raju Chebium

Gannett Washington Bureau

Washington DC

A Republican bill that would increase the amount of water available to farmers in CA's Central Valley, passed the GOP-majority House on 229 - 191 vote.

The measure would increase the share of water farmers and dairy producers could access under Central Valley Project, a federal water-management effort launched in 1933 to combat chronic shortages. Under the bill, the increased agricultural quota would result from the elimination of the allotment for the San Francisco Bay Delta to improve the habitat for Delta smelt and other fish.

The bill's backers said they want to help the region's economy and keep food prices low for consumers across the U.S. Critics said the measure would overturn state and federal laws and established science.  Central Valley producers have long resented water rationing and want to increase the amount they can use. Environmentalists say the smelt is a barometer of the San Francisco Bay's health and have gone to court to preserve water shipments from Central Valley.

The tension between the two sides has increased as California's drought has worsened -- and was reflected in the heated floor debate between California's Republican and Democratic House members.

-T. Kim

Rain or No Rain.. which do we want?!

Drought update

This weekend, the forecast for northern California calls for 1 - 3+ inches of rain/snow.  While this is relief for region suffering from the effects of a long running drought, the timing couldn't be worse.

Farmers, ranchers, environmentalists ... and Politicians have all been praying for rain or snow in California.  However, we really don't need it rain during the bloom season for the almond trees!!!!  This hampers the flowering and pollination for the almonds trees.

(On a side note, everyone last year was talking about how there weren't enough bees.  This year, that bit of news hasn't made headlines.  It's primarily because there is a bigger concern... lack of water.  They'll be talking about this one if and when the drought issue is resolved)

There is another concern that affects other products in the nut/dried fruit industry.

Growers usually plant and cultivate multiple crops.  Almond growers generally also grow figs, prunes, etc...
With the high prices(yes, I can hear everyone moaning about this one) of almonds, there is a bigger profit margin on growing almonds vs growing "just about anything else".  With only a limited supply of irrigation... I'm sure you can see where I'm going with this one.  Growers are pulling trees and planting almonds, walnuts or pistachios.

These are tree nuts, and tree fruits.  They are not row crops like corn or wheat, where you can just "skip" a year and continue next year  They take time before they are mature to bear fruit.  With the rising costs and lack of availability on irrigation, we will see problems becoming worse, before it gets better.

-T. Kim

California Officials forecast "Zero" water deliveries

Basically... the news isn't good and its not improving

State officials announced Friday that 29 water agencies serving 25 million people across California can expect “zero” water deliveries from the State Water Project this summer because of the worsening drought.

Although that delivery projection could change, it is the first time a “zero allocation” forecast has been made in the 54-year history of the State Water Project, which is operated by the California Department of Water Resources and typically delivers Sierra snowmelt to cities and farms throughout the state.

The decision was among several emergency measures announced Friday to deal with a persistent statewide drought that has left the California mountain snowpack at just 12 percent of the January average.

The “zero” forecast affects urban and agricultural areas from San Jose to San Diego that depend in part on water diverted from the Sacramento-San Joaquin Delta. Most of these areas have other water sources to draw from, including local reservoirs and groundwater wells.

The State Water Project serves about 750,000 acres of farmland. Most farmers have access to surface water and groundwater, including private wells, and it’s common for them to be given short allotments in drought years. Before Friday’s announcement, the State Water Project delivery forecast was only 5 percent of the maximum amount allotted in its contracts with water agencies.

Even so, the announcement assures further conservation measures will be required, and may press some farmers to fallow land. Farms consume about three-fourths of California’s freshwater supply.

The federal government operates a separate Delta water diversion system, the Central Valley Project, which is not affected by the state forecast. Its delivery forecast is expected later this month.

“This is the most serious drought we’ve faced in modern times,” said Felicia Marcus, chairwoman of the State Water Resources Control Board, which approved the emergency measures. “We will have to collaborate our way through this as never before.”

State and federal officials announced that starting today, water diversions from the Delta, a crucial wildlife habitat and California’s largest freshwater source, will be minimized to serve only urban areas and health and safety purposes. No water will be diverted for farms.

In addition, some 5,800 junior water rights holders across the state – mainly farms – will receive notices next week that they must reduce their water diversions from streams. And water quality rules in the Delta will be adjusted, which will increase salinity for some water users in the region and may affect wildlife.

“It’s a very serious situation,” Terry Erlewine, general manager of the State Water Contractors, said in a statement. “Across the board, water districts are ramping up conservation and efficiency efforts to go beyond the conservation achievements already made.”

The zero delivery forecast does not affect water users in the Sacramento region, who are not served by the State Water Project. But the capital area faces its own shortages and is enacting broad conservation measures.
On Thursday, for instance, the board of directors of the Placer County Water Agency will vote on an emergency declaration and call on customers to reduce water consumption by 35 percent. It will also consider an emergency public works project to install temporary pumps and piping to improve access to water from two existing wells.

The Delta water quality rules are being adjusted so that state and federal agencies can preserve water stored in reservoirs, primarily in the Sacramento River watershed. This will ensure that water is available, in the event the drought continues, to deliver to people in the hot months ahead and to ensure salmon and other fish can survive in the rivers.

“Today’s action means everyone will get less water as a result,” said DWR director Mark Cowin. “There’s simply not enough to go around.”

Another change allows water agencies to open the Delta Cross Channel Gates near Walnut Grove. Those gates divert a portion of Sacramento River flows into the interior Delta, where it is then diverted by state and federal pumps. Open gates mean less fresh water will flow out of the Delta to San Francisco Bay, and portions of the western Delta will become saltier. But officials said they expect those western Delta waters will still meet drinking water standards.

The gates are normally closed at this time of year to ensure that young salmon migrating downstream to the ocean are not sidetracked. Opening them now means those salmon are more likely to be eaten by predators in the interior Delta or killed in water diversion pumps.

Officials may adjust the gates daily to avoid harm to salmon. Juvenile salmon are prone to migrate during daylight hours, then seek protected areas and stay in place at night. So the gates may be opened only at night, when salmon are less active.

The water board, which oversees water quality and water rights statewide, plans to review all the changes on an ongoing basis and amend them as necessary. It also plans to beef up its enforcement reach. Tom Howard, water board executive director, said some employees would be retrained to do inspection work in the field to ensure junior water rights holders heed the curtailment order.

Local agencies that depend on the State Water Project greeted Friday’s news with alarm. Many expected a low allocation, but zero was a shock.

“I never though in my entire career I’d see a zero allocation,” said Jim Beck, general manager of the Kern County Water Agency.
Beck has worked for the agency for 30 years. It is the largest agricultural water contractor in the State Water Project system and also serves urban areas including Bakersfield, Taft and Tehachapi. He said farmers will be able to draw from a vast groundwater banking system operated by the agency and, in some cases, from private wells.

But that water won’t go far enough, he said, and many farmers will be in “survival mode” this year.

“Our growers are going to have to make really tough decisions on which crops they can fallow and which trees or vines they can take out of production,” Beck said.

Marty Lugo, spokeswoman for the Santa Clara Valley Water District, said her district was hurting even before the announcement. The district holds State Water Project contracts for as much 100,000 acre-feet of water each year. Until today, its allocation for this year was 5,000 acre-feet – about 1 percent of the water distributed by the district.

“We already expected we would get a small amount, if any at all,” Lugo said, adding that annual water demand for the district is 365,000 acre-feet.

The district has taken steps to cut water usage by 10 percent. Its groundwater supplies are expected to drop below 300,000 acre-feet by the end of the year.

At nearby Alameda County Water District, about 40 percent of water supplies typically come from state allocations, said assistant general manager Robert Shaver. “Obviously, it’s a pretty serious situation whether it’s at 5 percent or zero percent,” he said. “We had kind of been expecting that it would go to zero percent.”

To make up for the lack of water from the state, Shaver’s district will rely more heavily on groundwater. Those supplies will be tight, he said, as the year progresses. The district has asked customers to cut water use by 20 percent.

Bill Jennings, executive director of the California Sportfishing Protection Alliance, worries that the emergency changes, along with the drought itself, could push some imperiled Delta fish species toward extinction.

“Yes, fish are going to suffer. Population crashes occur during these periods,” Jennings said. “We can cast blame, but we’re in this situation and they don’t have a lot of leeway. Everybody’s going to pay a price this year.”


Source : The Sacramento Bee
http://www.sacbee.com/2014/01/31/6119042/california-officials-forecast.html

Cashews

The market on cashews are still eerily quiet.  With all the news breaking from California about the temperature, moisture, bees, etc... Cashew is being ignored like a middle child at a family reunion.

"With cashews now the lowest priced tree nut in the market(other than peanuts), this could lead to some good support during the summer months.  Despite the fact that trading has been very quiet for cashews over the past four months, the prices have not weakened.

In fact, they have recently risen slightly due to the high price of raw seeds in Tanzania and Indonesia.  The biggest Northern Hemisphere crops are expected shortly in Vietnam, India and West Africa.  So far, we have not heard anything disastrous to offset the market market.  However, as the raw seed availability is so tight nearby, there will likely be good support at the start of the crops so prices for seeds are very likely to remain firm at least until end of Q2."

With the prices on the comparable nuts being so high(this means you, almonds, walnuts, pistachios, etc...)We don't see kernel consumption dropping as a result of current prices.  It is highly unlikely that we will see lower kernel prices anytime soon.

Thank you

-T. Kim
(Quotes from Mr. Mark Gravette, Barrow Lane and Ballard, UK)

California Drought

Californian Tree Nuts

It seems like "drought" is the only word that everyone seems to talk about in California, these days.

With current pricing on domestic nuts(pistachio, almonds, walnuts, etc), everyone has a stake in how much water California gets in the next month or two.  Unfortunately, it isn't looking too good.

According to US Drought Monitor(produced jointly by USDA, Dept of Agriculture and National Drought Mitigation Center, or NDMC), Western US is in for "Severe" drought for the next three months.  The reservoirs and wells are at lowest levels seen in decades and there doesn't seem to be good news in sight.

The almond growers and packers are becoming concerned for next year's crop.  The silver lining seems to be that they're finding that crop receipt number may hit 2 billion pounds.  However, with the recent news, the prices from growers have only increased.  Market is continuing the trends experienced last week. We now are looking at a nearly $0.20 cent increase in prices since the shipment report earlier this month. Many regions seem to have been uncovered on all early 2014 needs and well into the spring.  It is still too early to tell if this drought will have effect, if any, on 2014 crop.

The walnut market, which traditionally trended lower past Chinese New Year purchases, have remained stable.  With current conditions in CA and news that Chinese walnut crop is expected to be short anywhere from 20 - 30%, have kept the walnut pricing at a stable level.... which is still very high.

Please contact me if you have any questions or concerns regarding updates within the market.

Thank you.

-T. Kim

Walnut Shipment : December 2013

Good Afternoon All

Please find the update from Walnut Board's shipment report below.

As of December, 31, 2013, the packers reported walnut receipts of 487,963 tons, which should reflect close to the final 2013 crop tonnage.


Although the Central Valley has experience extra cold temperatures for the month of December, growers feel they may lose some new growth, but overall, it should not have much of an effect on the trees.

However, the major concern right now is that California is experiencing a record breaking drought. It has been reported that 2013 was the driest calendar year on record for the San Joaquin Valley.  Many of the experts fear that there is little possibility of relief in sight as the long term climate predictions do not suggest a likelihood for an average or above average rainfall over the next several months.  Right now, the Valley is only 20 percent of 8.4 inch rainfall average for this time of year.

I have discussed this with several of the major growers in this area and all are saying that water could be a major factor for the 2014 walnut crop.  Many growers were irrigation in Mid-December, which is rare for this time of year.  Many of the growers believe they will be looking forward to higher cost for water as well as some shortages in certain areas.

December inshell shipments were 36.7 million pounds, up 3.3 million pounds from last year.

Shelled shipments were 29.6 million pounds, up 2.6 million pounds from last year. Total December shipments were 51,779 tons (inshell equivalent) compared to 47,849 tons last year

The total year to date shipments (inshell equivalent) is 259,784 tons, compared to 252,684 tons at this time last year.

Based on the fact that the crop is down, shipments are up; I believe the industry should not have any problem moving this year’s crop at the current market levels.

California Walnut Shipments Recap (000)

Month (Dec)         2012/13      Year to Date      2013/14     Year to Date     Percent

In-shell (lbs.)             33,357            227,441              36,740      241,464             6.2 %

Shelled (lbs.)             27,680            123,400              29,601      123,200            -0.2%

Total Tons               47,849             252,684             51,779       259,784             2.3%

The market has not moved much over the holidays and will most likely stay firm at least for the next month or so.

Demand from Europe for shelled products and Turkey for inshell is still active as well as domestic customers looking to secure contracts for their annual requirements.

The forward market has yet to be determined and the market will adjust to whatever China does after their New Year. My guess is they will be back as current shipments are down for this region and there will most likely be less carry-over inventory they had at this time last year. In any case, don't believe the market will move much one way or the other.

Regards,

R.L. "Pete" Turner

2014!

Happy New Year Everyone!!

It has been a long and hectic year, though I'm glad that 2013 is over and welcoming 2014...

Well, not so much.  A lot of information from California, Brazil, Turkey, SE Asia isn't so great.

Please see below regarding market outlook for 2014.

Apricots

Turkish dried apricots account for almost 80+% of the world’s market.  Turkish apricots have mild and sweet taste when compared to US or China, which offers a sharper, more distinct taste.  The apricot market in Turkey remains stable for now.  The quality of 2012 crop had been leaning towards smaller sizes.  Availability for Size #1 was very short.  The current crop, 2013 harvest, shows improvement on quality of larger fruit.  Size Jumbo and #1 is now in good supply and outlook for 2014 remains stable.  The harvest of Apricots in Turkey is from July(early) to October, with shipments to US arriving by November.

Prunes

-         Majority of the prunes originate from US, Chile and Argentina.  Prunes, dried plums, are currently in short supply, as there currently is a draught issue plaguing California and western United States(It will be a recurring issue, as noted below).  The drier/packers in California are now “off the market”.  They’ve cleared their excess inventory and are only holding inventory for contracted quantities.  The harvest of Prunes in Argentina/Chile is in March and August/September for US crop.

Banana Chips

-         Dried banana chips are imported into US from Philippines.  The current crop and supply remains stable, after a sharp spike, due to weather related issues.  The dried banana chips are available throughout the year.

Cranberries

-         Dried cranberries are produced in US, Canada and Chile.  The supply and crop from 2012 crop was good, with stable demand, driving the pricing lower during 2013.  The 2014 market also seems very stable, with no spikes and/or dips in the foreseeable future.  The cranberries are harvested during March/April for Chile and Sept/November for Northern Hemisphere.

Cashew

-         There are a few players that are involved in the Cashew market.  Vietnam and India remains top processors in the world, trailed by Brazil.  Ivory Coast(Africa) are leaders in RCN(Raw Cashew Nuts).  Majority of imports to US originate from Vietnam and India.  The market has been stable for the last 3+ months, with everyone (buyers and sellers) expecting the pricing to rise.  African crop remains to be seen, though we are expecting a good quality crop.  With the current market conditions, any news that adversely affects the market will send market pricing higher.

Almonds

-         And now, we run in to major issues… The US almond crop(covering majority of world production) has hit record production for the last 3 years… with supply still unable to meet the demand.  The almond crop has seen increasing(spiking) pricing levels for the last two years.  The almonds remains extremely high priced, compared to previous years.  With the news of impending draught issues in California has only acerbated the problem.  The size of the kernels remains a problem, with virtually no size larger than 27/30 available.  There may be relief in sight for 2014 crop as subjective and objective crop estimates become available in March and May.  The harvest is in July with August ship dates for new crop.  With delays and issues plaguing the industry, we’ve noticed that for the last few years, the new crops have only shipped beginning in September.

Walnuts

-         The US walnut is the current leader in production, providing majority of the world.  Surprisingly, the walnut market has been quiet with no major market movements post harvest.  This may be due to uproar over the almond crops.  This does not mean that market pricing is “reasonable” and supply is abundant.  At current trading price, many packers and traders feel that pricing may not be sustainable.  While we do expect market pricing to ease off a bit in the coming months, China and India are major factors to consider(more on this below).  The crop estimates are available during Q2 and Q3, with harvest occurring from early August through October and November for Chandler varieties.

Pecan

-         The US pecan market is at a very high level.  US and Mexico are major suppliers, with growing regions in Texas, Georgia and surrounding states.  The current pecan market is about $1/lb over last year’s opening market price for new crop.  Barring any issues (weather, pests, China…) we may see a gradual easing of the market pricing as we move through 2014.  The pecan crop harvest is during Q3, ending in November(Just in time for Thanksgiving/Christmas season!). 

Pistachio

-         Pistachio market has been on a roller coaster for 2013 season.  The pricing differential throughout the year has been +/- $1.50/lb(or about 30%).  Currently, the pistachio market is very high, with limited offerings from majority of the packers.  The quality of the crop seems to run towards smaller sizing(21/25) and pricing remain firm in the foreseeable future.  The pistachio harvest is generally done during late Q3.

Please let me know what your thoughts are on the matter. 

AUG 18, 2012

Cashew market was steady in Week 33 – hardly any business reported although there was a fair amount of buying interest from some traders in USA & Europe at lower end of the range.  Indian domestic market moved up a bit but the activity was slow.  China demand in Vietnam is also slow but expected to pick up.  Small shellers who were selling at lower levels in June/July have been quiet for the last few weeks.  Most of the other shellers who have RCN to process till end of the year are waiting to see how kernel market behaves in coming weeks.  As they have paid high prices for the RCN and there is not much replacement available, they are not keen to sell at lower levels.

Buyers in the main importing regions – USA & Europe – are picking up any offers they see at the lower end of the current range (for nearbys) BUT  do not seem to be willing to pay the 10-15 cents premium that shellers are asking for the forwards. This situation is likely to continue until there is some contracting with retailers.

In normal times, some people – on both sides – would be willing to take forward positions but the precarious global economic situation is making things difficult.   Buyers do not want to pay premium for securing volume as they do not know what they will be able to sell.  Shellers do not want to sell forwards at lower end of the range because it is below cost  and they do not know see any prospect of decline in RCN prices since availability in next few months is limited.

In the medium term, demand will be the factor that will determine market movement. There is no big news expected on the supply side until the next Northern crops in 2013. Of course, the Brazil & East Africa 2012 crops which will start in Sep/Oct will have some impact but not too much as they only produce 25% of the world crop.

In the next 6-8 weeks, we will know trend of Asian demand for the last quarter and we will probably get some idea of USA/EU demand for the first half of next year.  If activity picks up in this period, we could see prices inch up a bit to the levels seen at the end of last year.   Otherwise, prices will continue to move around the current level unless there is a big drop in demand followed by a decline in RCN prices.

Would be grateful for your comments on market situation + views & forecast on trend for coming months + any information, news AND interest.

Regards,
Pankaj N. Sampat