Lower almond prices spark shipment increase as new marketing year begins

With the California almond harvest moving towards an expected conclusion by mid-October, production figures are still being tallied.

However, based on yields since the harvest began in early August, a number of observers anticipate the 2016 almond crop size will exceed the 2.05 billion meat pounds predicted by the National Agricultural Statistics Service in the agency’s objective forecast released July 6.

This estimate represents a 7.9 percent increase in production over 2015.

Overall, nuts coming in are grading about average in quality which is similar to last year, says Paul Ewing with RPAC, LLC, an independent almond processor based in Los Banos, Calif. In some cases, quality has suffered from unusually high levels of insect damage. Some growers have been hit extremely hard by insects, particularly ants and the Navel orangeworm.

Damage levels in those orchards have ranged as high as 5 to 10 percent, he notes. However, the industry average is tracking similar to last season at about 1.4 percent.

Sporadic cases of very high insect damage are frequently related to some growers responding to a drop in almond prices, as occurred last year, when they cut expenses including labor and chemicals, says David Doll, University of California Cooperative Extension Service farm advisor, Merced County. This includes reducing orchard sanitation efforts and insecticide use.

The grower prices for their 2016 crop at the start of harvest had fallen to only about half what they were a year earlier.

For example, at the beginning of the 2015 harvest, the market valued the Nonpareil variety, about 38 percent of California’s total almond production, at about $4.50 per meat pound. By the start of the 2016 crop marketing year on Aug. 1, the price for Nonpareil kernels had sunk to around $2.40 per pound, says Ewing.

Prices for pollinators were $2.00 and below, compared to $4.25-plus a year prior.

Meanwhile, almond demand has begun to perk up. The carry-out of unsold 2015 almonds into the new marketing year totaled 412 million pounds. Although nearly 10 percent more than from the 377 million-pound inventory on hand at the beginning of the 2015 marketing year, observers were relieved that it wasn’t even more.

“The fact that we didn’t have a huge carry-out, as some people had worried, means the industry lowered almond prices enough over the preceding marketing year to help bring demand more in line with supply,” Ewing says.

He pointed to another encouraging sign of a healthier industry - new crop almond shipments are up strongly from a year ago.

“The new marketing year got off to a wonderful start,” says Ewing. “Many in the industry were shocked to see August shipments rise 35 percent above those a year earlier. That’s a record increase. September shipments are likely to be well above the previous September and may set another record.”

At the same time, he cautions that a two-month period doesn’t necessarily suggest a trend. Also, the dramatic increase in shipments the last two months should be viewed in relation to their previous-year benchmarks when shipments were unusually low for the first five months of the season.

“Also, keep in mind that observers say it takes anywhere from about 6 to 12 months for prices to work their way through the marketing system,” Ewing explains. “The current high shipments show that the really low prices for almonds which began this past February are rebuilding demand for our product.”

This strengthening reflects a strong rebound of sales in North America and promising market growth in China, India, and Turkey, he notes. Also, the higher price of alternative nuts including cashews and hazelnuts is boosting the demand for almonds as well.

Ewing is encouraged by another positive development in the almond market.

“By the start of September, we’d already sold or shipped about a third of the 2016 crop,” Ewing says. “This bodes well for market strength.

“Sellers didn’t want to risk setting opening prices too high and were satisfied to sell at opening levels. They were conservative to help ensure that demand got off to a great start. Also, they set the stage for prices that will move the future higher production levels as recently increased acreage of new almond orchards start bearing crops.”

As a result of the conservative start and strong shipments, prices increased about 20 cents a pound in September, says Ewing.

Source: http://westernfarmpress.com/