Senior Vice President
May’s ABC Position Report shows shipments of 178.7 million pounds in May, up 13% from last year. YTD shipments stands at 1.944 billion pounds which is within 1% of last year’s number. New sales during May were 108 million pounds which will lead to continued strong shipments going forward. With the 2018 crop remaining at 2.267 billion pounds, the most significant number in the report is the uncommitted inventory of 274.4 million lbs. With an ending inventory projecting below 350 million lbs., uncommitted inventory will be at very low levels. Additionally, the next 90-120 days of pollinizer supply will be every bit as tight as last year. Furthermore, with the mild spring weather it is likely the harvest may trend later. Typically, pollinators will not be ready for new crop shipment until end September / October. The very low carryout number will stress the industry as it struggles to have supply to meet early new crop demand.
The increased May shipment numbers were driven by India and China. With Australia now well sold on their crop, these markets need to turn to California for supply to meet upcoming seasonal requirements. China, while down 30% year to date, had a strong shipment number of almost 6 million pounds for May when compared to 1.8 million last year (consider the upside if we ever resolve the tariff wars). India continues to demonstrate impressive growth, up 12% over last year to date, with May shipments of 18 million pounds, compared to 9.9 million pounds for May last year. Shipments to India have now crossed the 200 million pound threshold! Year to date shipments to India now stand at 201.8 million pounds. The EU as a whole is down 4% and the Middle East is up 3% year to date despite Turkey being down 30%, with Saudi making nice gains. These numbers illustrate the versatility of the California Almond industry, not just in product applications, but with shipments as well. Strong demand in many world markets allows California almonds to adjust to a fluid shipment pattern and demand.
The next data point is the NASS Objective Estimate on July 3rd which is believed to be close to the subjective estimate of 2.5 billion pounds. Given the tight supply situation, the Objective estimate is unlikely to have much influence on remaining 2018 crop prices.
The May Position Report data emphasizes that, once again tight ending inventories will result in late season price pressure. Significant coverage for pollenizers will be difficult to obtain, so expect Nonpareil to be substituted until new crop as it was last year.
The short inventories of 2018 crop will make transition pricing problematic and will continue so at least until the Objective Estimate removes one more variable to negotiations.