Senior Vice President
The ABC Position Report was released earlier today showing January receipts of 125 million lbs. taking the 2019 crop YTD receipts to just over 2.5 billion lbs. The likely final crop may be closer to 2.55 billion lbs., as most huller shellers discontinued production in January. Overall shipments for January were up 5%, leaving YTD shipments up 4.3%. January U.S. shipments bumped up by 7.6% over last year with export shipments up by 1.5% for the month. Commitments were strong in January at 210 million lbs., leaving YTD commitments 61 million lbs. and 11.2% up over last year. Export commitments crept into positive year over year territory, while U.S. commitments remain 20% ahead of last year.
In the North American market, new product introductions and expanding ingredient demand are keeping shipments stable. The trend will continue as this market shows robust commitments and still requires coverage before new crop arrives. The EU, with strong shipments over the last few reports, still appears to require substantial product in order to make a smooth transition into new crop which is just over six months away. The Middle East is currently buying for Ramadan and with the Gulf Food show starting next week we will see increased activity before the hotter summer months. India is active and shipment numbers clearly show the long-term strength of the market. We anticipate continued demand at a steady pace for California’s largest export market. China remains a question, with continuing tariff issues and the Coronavirus. During the last few weeks, the Chinese market has suffered due to concerns regarding the Coronavirus impacting Chinese New Year consumption. Gifting and entertaining are down as the public stays home and avoids food markets. With the Australian crop coming to harvest soon and originally targeting the China demand with their duty-free advantage, they may need to relook at their other markets for demand if China problems persist.
Markets worldwide will now carefully watch the weather reports for the next 3-4 weeks as California moves into the bloom. The short-term weather forecast is for favorable bloom conditions. While harvest is still 7 months away, many buyers are gauging when to make future contracting decisions. Remaining supplies for SSR and other specific products are already in short supply for the remainder of the 2019 crop year. However, SSR prices have softened from their $3.00+ peaks as it appears the Nonpareil supply up 150 million lbs. over 2018 crop is adequate to supplement Pollinizers through the rest of this crop year. The growth in supply and the substitution demand have compressed prices between Nonpareil and other varieties to their lowest differential levels in years.
Overall, we see a steady market with good demand in most areas as we look to a good early bloom and a larger crop next year. It is reasonable to assume, with mother nature cooperating, a 2.75 + billion lb. crop is achievable for 2020.
With a 2019 crop above 2.5 billion and demand growing, but at modest rates, prices have eroded from their 2019 crop peaks. It appears that ending inventory will rebound from last year’s 319 million lbs. to somewhere in the mid 400’s depending on final crop size and demand in the final five months of the fiscal year.
Recent prices reflect an increased Nonpareil supply driving prices closer to pollenizers, and in the case of small SSR occasionally inverting.
By mid-March, outlook on bloom and the balance of 2019 demand will weigh heavily as determining factors regarding price levels and price stability. For now, the market reflects the rapidly changing conditions with a measure of volatility.