Senior Vice President
The Almond Board of California July Position Report was issued this week, the final report for the 2018 crop year. July shipments were 154.2 million pounds, an increase of 7% over the same time last year and a new record for July. The final year-to-date shipment number for the 2018 crop was 2.26 billion pounds, exceeding the 2.25 billion pounds shipped last year.
The industry ends the 2018 crop with a carry-out inventory of only 319 million pounds, 40 million pounds less than last year and the lowest number since 2012 crop. With a low carry-out and a later harvest, the industry is experiencing a very difficult transition to get to new crop. The market has reflected this with firm prices, especially for pollinators which will not be able to keep up with demand until mid Oct/Nov.
With commitments for the 2018 crop at 164 million pounds and the uncommitted inventory at only 155 million pounds there is minimal tonnage left for sale out of the 2018 crop. New 2019 crop sales stand at 352 million pounds, significantly more than the 206.9 million at the same time last year. These new crop sales put the 2019 supply at ~14% committed.
The 2018 crop year presented significant challenges to the California almond industry, including an overly optimistic Objective Estimate and uncharted waters created by various trade issues. China / HK shipments were down over 25% and are directly attributed to the trade war between the US and China. Turkey was down 30% for the same reasons. Despite these obstacles, California shipped a record 2.26 billion pounds for the year. Shipments for the US market were 741 million pounds and India is now the largest export market with 231 million pounds.
For the coming year, many of the trade issues remain resulting in buyers and sellers using a cautious approach moving forward. The media mentioned China declared they will not buy US agricultural products after the latest disagreements. This China announcement relates to purchases by China state enterprises buying soy, sorghum, etc. rather than specialty crops and sales with private industry. The California almond industry should not be directly impacted.
The harvest has begun and will be in full swing within 1-2 weeks, providing the first indications on the Nonpareil and Independence crops which represent more than 40% of the total tonnage. It will take until December to get a good understanding of the size of the entire 2019 crop. With an unexpectedly low Objective Estimate of 2.2 billion pounds many buyers and sellers are waiting for initial receipt information before contracting and making all their commitments. Even Consumer Packaged Goods companies are predominately covering only through December, rather than pursuing full year coverage.
The low ending inventory and even further limited uncommitted inventory resulted in rising prices at the tail end of the 2018 crop and into the transition period.
The 2.2 billion lb. Objective Estimate has created enough uncertainty to limit long range commitments, though early 2019 commitments exceed those of last year. 2019 Crop pricing through December arguably reflect levels associated with a crop of ~2.4 billion lbs., splitting some of the difference between the Subjective and Objective Estimates.
Global demand for almonds remains strong as evidenced by the dwindling supply in the face of rising prices. Buying behavior is likely to remain focused on nearby positions until more is known about the 2019 crop harvest.
We wish all our friends in the industry a prosperous and successful 2019 crop as we enter another harvest season.