Almond Industry Update - January 2024

Executive Summary:

The almond industry navigates a complex landscape marked by a fluctuating climate, with recent weather patterns presenting both challenges and opportunities. Despite a decrease in production and a dynamic global market, the industry demonstrates resilience and strategic positioning for future growth.

Key Insights:

Environmental and Water Concerns

·      Sierra Snowpack Levels: California's critical water source, the Sierra snowpack, is currently at 52% of its average, signaling a significant drop from last year's 200% after a notably dry January. An expected atmospheric river might bring rain, but minimal snowfall, posing risks to almond water supply.

·      Impact on Almond Cultivation: The reduced snowpack and limited rainfall forecast jeopardize water availability for almond farming, necessitating efficient water management strategies.

Almond Production Insights

·      Estimates of Crop Volume: The almond crop for this period is projected at 2.23 billion pounds, marking a 6.2% decline from the prior year. Despite anticipations of reaching beyond 2.4 billion pounds, projections remain below the initial 2.6 billion pound expectation, suggesting a constrained supply scenario.

·      Adjustment to Supply Projections: The current harvest estimates indicate a shift towards a leaner supply chain in the almond industry, potentially impacting market prices and availability.

Market and Trade Analysis

·      Quarterly Shipment Performance: The final quarter of 2023 saw almond shipments outperforming the previous year by 10%, indicating strong market presence and demand. The lower anticipated carry-out of 550 million pounds versus the prior 800 million highlights a strategic supply-demand equilibrium.

·      Export Growth to Asia: Almond shipments to China/HK/Vietnam soared by 391%, evidencing significant market growth and acceptance, particularly in anticipation of the Chinese New Year celebrations, and marking a year-to-date export increase of 13.59%.

Sales and Pricing Dynamics

 ·      December Sales Overview: Sales in December experienced a 7% decline, reflecting a market strategy of holding for higher prices due to the tight supply.

·      Commitment Adjustments: New crop year commitments have seen an 11% reduction, aligning with the smaller harvest size and adjusting market strategies to navigate the fluctuating supply landscape.

 Market Sentiment:

Positive Market Signals

·      Robust Shipments Trend: The industry witnessed a continuation of strong shipments in the last quarter of 2023, surpassing figures from the year before.

·      Supply-Demand Dynamics: A constrained supply coupled with steadfast demand suggests a potential for increased pricing power.

·      Growth in Asian Exports: The export segment, particularly towards Asian markets, shows strong growth and a robust demand pattern.

Market Concerns

·      Sales Deceleration in December: The recent dip in sales may pose risks to forthcoming shipment volumes.

·      Potential Increase in Production: Anticipated favorable weather conditions for the upcoming growing season could elevate production levels, altering market balance.

·      Logistical and Cost Pressures: Challenges in shipping logistics and heightened energy expenses, compounded by geopolitical tensions, continue to pose significant operational challenges.

Strategic Outlook:

The almond industry's strategic foresight and adaptability are key to navigating current challenges. With a keen eye on climatic conditions, market demands, and global trade dynamics, stakeholders are poised to leverage opportunities for sustainable growth. The emphasis on aligning supply with demand, coupled with strategic market engagement, underscores the industry's resilience and long-term potential.