Senior Vice President
August receipts of 2018 crop are not meaningful in total, as they reflect start dates rather than crop size… but Nonpareil initially appears to be down by as much as 5-10% from prior year:
- The NASS tree nut count on Nonpareil was down by 14%
- NASS called the Nonpareil crop up 0.8% from last year
- It is unclear if there is sufficient new acreage to get back to 95% of last year’s crop with a lower tree nut count
- Serious damage levels are lower than last year
Carry-in inventory did not adjust downward as much as expected from the July ending inventory:
- There could still be a fair amount of low-quality inventory (e.g. doubles & rejects) in the beginning inventory
Shipments for August were 14 million lbs less than the prior year:
- The U.S. repeats shipments of 67 million lbs, duplicating last year’s record domestic August shipments
- Asian markets up 13% in shipments despite trade issues and later harvest
- Inshell is shipping at capacity, the same early pace as last year
- The pollinizer shortage of the last several months led to the EU’s 16 million lb shipment shortfall… the short pollinizer supply limited EU shipments and led to higher prices May-Aug
The decreased commitments reflect market hesitancy regarding forward prices:
- Trade issues and currency valuations have limited forward commitments
- There is no evidence of decline in underlying consumer demand (e.g. U.S. & Asia shipments) in any market
Recent pricing on Nonpareil has exhibited wide spreads between the high & low offers for the same product in the same week.
The gap between Nonpareil and pollinizer pricing has narrowed, reflecting the continued shortage of pollinizers dating back to late Spring of 2018.
Differentials between Nonpareil and other varieties will increase as the 2018 crop is further harvested.
Global demand at the consumer level remains strong.
Between now and the end of October, the trends on receipts, shipments, & commitments will become more meaningful, bringing clarity to the market.