Senior Vice President
On this month’s ABC Position Report, March shipments showed a very strong increase of 23 million lbs. (12.6%) over last year to reach a total of 208.2 million lbs. The U.S., driven by Covid-19 related retail demand, increased by nearly 19 million lbs. (31%). Export shipments were up by a more moderate 4.3 million lbs., with some dampening of demand due to supply chain concerns. Year to date shipments now stand at 1.681 billion pounds which is a 5% increase from last year.
New commitments were 174 million lbs., keeping total commitments 20% above last year. With the 2019 crop topping out just over 2.53 billion lbs., uncommitted inventory exceeds last year by only 39 million lbs.
At any other time, this would have been very bullish news for California almond growers. In the strange world of a Covid-19 pandemic, there is more uncertainty than would typically accompany such news. Ending inventory under normal circumstances would be driving down towards 400 million lbs. If shipments for the balance of the year remain similar to last year, ending inventory would be closer to 450 million lbs.
In the U.S market, there has been an uptick in shipments with retailers calling to move up shipments to meet current demand as consumers are buying extra foodstuffs during this period of uncertainty. Retailers in the EU are seeing a similar impact. While Japan, Korea, China and Southeast Asia seem to be weathering the storm better than most markets, the Middle East and India are where we see the most disruption.
India implemented a lock-down on March 22, exempting essential services as a result of Covid-19. There has been wide disruption at the ports and at almond processing facilities. While workers involved with essential services should be allowed to work, there is mass confusion. Workers are not able to get to their factories. All logistics involving processing cargo out of the port, getting cleared, and transported to final destinations have come to a standstill. There is, in the last few days, slow progress and the government of India has issued a number of decrees stating essential services need to be protected.
The delays and confusion are not a result of weaker prices. The Indian market has been growing year over year and there is now strong demand to get cargo out of the ports to be processed and consumed. In fact, the local India almond market prices have firmed substantially in the last few days as supplies become tight. If the current logistical bottleneck is able to be cleared in a reasonable time, there should be minimal impact as we exit the 2019 crop year.
It would be an understatement to say it is difficult to project the trajectory of almond markets over the coming months. Covid-19 has created significant disruption around the globe. Over the next few weeks, the situation should come more in focus.
Almond demand has been steady, and even experienced short-term spikes with “stay-at-home” directives causing shoppers to stock up. The outlook for the next few months will depend on how quickly economies return to full activity and how quickly supply chains unwind the last few weeks of disrupted activity.
The 2020 Crop is still 4-5 months away, and supply chain security is of utmost importance in the short term.
Stay safe and stay healthy!