California Almonds: Lower Prices Are The Key To Demand Growth

Image from David Doll, University of California Cooperative Extension

Editor’s Note: This analysis is from the May Almond Market Update issued by RPAC LLC.

When we had 274 million lbs. uncommitted a year ago, pricing was $1/lb. higher and supply was very tight going into the transition into 2019 crop.  Certain items are already getting difficult to find.  Following today’s report, there may be more availability of certain items as sellers that held onto some volumes let go, but we don’t expect there to be an overly bountiful transition.

This is all tough to forecast as we see very large spikes and dips in shipments to markets, industries/sectors and individual buyers, based on how they are affected by the shifts in trade and consumer habits as a result of COVID-19.  The large dip in the domestic market is likely due to the over-filling of the pipeline seen with the 31% spike in shipments in March.

As more of Europe comes out of lock down we are seeing a slight pick-up in releases for shipments that were held back.  The Middle East has been increasingly active lately.  Japan has been quiet.

Lower pricing reaching consumers is the key to demand growth.  Recently the USD has weakened against some currencies which make these prices even more attractive.  Buyers domestically or overseas with good stocks are not yet positioned to pass on the new and very attractive prices.  In some cases, US retailers may not reflect the lower prices until early 2021.  However, there are important other examples of where it will be much faster.

Further Price Decline Likely

In just the past week, at a major local club store pricing for a 3 lb. bag of almonds dropped from 12.79/bag to 11.99/bag.  It’s by far the cheapest tree nut in the section with walnuts at 13.49 for example.  We expect this price to continue to drop as lower-priced stocks come in, and consumption to continue to grow.  In other markets like the Middle East the lower prices generally can be passed through the chain much quicker.

Going into the 2016 crop year, after a major price correction, we pointed out prior seasons with large shipment growth (such as 16% in 2006 and 18% in 2007), and the skeptics pointed out that we had grown demand considerably based on much smaller bases like 1 billion lb. crops.  That year in 2016 with a 2+ billion lb. crop, the industry still grew demand by 16%.  Granted, COVID-19 throws a wild card into the mix, but demand should still grow quite considerably in the coming season.

And 2021 crop is likely to be a lower yield/acre if we really do set the kind of record per acre yield that’s currently predicted.

Pricing this low has only been seen basically during one period of the past 15 years (2008-2009).   While we are optimistic for demand growth in the upcoming season, in the very short-term this lower shipment report could weigh on the market, depending on how much buying needs to take place for nearby and how quickly consumption reacts to these low prices in different markets.

Overseas production, particularly out of the Iberian peninsula, will grow considerably in the coming season.  There is a wide variance in expectations for the 2020 crop and we are looking forward to seeing the objective report.  The sampling will be much more thorough this year with double the branches per tree (2 from 1) and moderately more orchards sampled.  There will also be more focus on region and variety sampled given the changing make-up within the state.

We also should see a more detailed breakdown of the crop by region.  The industry is looking forward to this additional data point as we try to forecast 2020 global supply.




The Latest


Send press releases to Ernst@Agfax.com.

View All Events


Send press releases to Ernst@Agfax.com.

View All Events