Bill Morecraft
Senior Vice President
California almond receipts for the past month crept up by 11 million lbs. on the June ABC Position Report to bring the 2019 Crop YTD totals to 2.547 billion lbs. Almond shipments were up by 10 million lbs. for the month, or 6% over last year, bringing YTD shipments to 2.192 billion, up nearly 4% on the year. New commitments for the month were similar to last year at 90 million lbs., bringing June month-end commitments to 370 million lbs., up 31% from last year. Uncommitted 2019 inventory is 252 million lbs., also up by 33% from prior year. The 2019 Crop year will end next month with the ending inventory being restored to a healthy working level of ~460 million lbs.
New crop commitments increased by 172 million lbs. in June, reaching 458 million lbs. The 2020 commitments are nearly double the 231 million pounds of 2019 commitments recorded at the same time last year. U.S. commitments are up 210% and Export commitments are up 189% from last June. The early start to new crop commitments has been aided by more affordable pricing than buyers have seen for several years. It is likely an early view into an increasing rate of growth with a larger supply available out of the 2020 Crop
After a difficult last few months due to the Covid-19 lockdown and related performance issues, California handlers have navigated most of their issues in India and the region is primed to recover nicely. Despite these strong headwinds, India shipments are still up 7% over last year with one more month to go before the final shipment tally for CY 2019. New crop bookings are active with many watching to see if defaulters are able to reenter the market yet again. With current prices and the ever-expanding customer base, India should enjoy a significant increase in consumption for the 2020 crop year. China shipments are down another 23% from last year, not considering Vietnam which is down 75% from last year. This market more than any other, has taken the hit the hardest due to the tariff issues which have impacted our industry over the last two years. Despite the continuing tariff obstacles, the California almond industry is off to a nice start for the 2020 crop year.
Impressive shipment numbers in the Middle East are attributed to Turkey and Dubai, possibly connected to trans-shipments to other markets in the region. European shipments are up 6% and continue to be active with current and new crop buying.
The NASS Objective Almond Estimate, released on July 7, mirrored the previously released Subjective Estimate at 3.0 billion lbs. Added to the 2019 carry-out inventory, overall supply will be 3.4+ billion pounds.
Hull split for early varieties has begun with hull split treatments being applied. With the heat that is being experienced, the process is moving along leisurely. Early shaking will occur in the second half of July.
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Market Perspective A 3.0 billion lbs. 2020 Crop is in line with BDG expectations. The overall supply will create favorable pricing conditions for buyers for at least the first half of the year. Typically, this will drive some incremental growth. Demand in most geographies is beginning to recover steadily from the COVID-19 induced interruptions. Early demand signals from the U.S., E.U., China and India all indicate the potential for significant growth in the upcoming year. Demand in the U.S. could have even more future upside since the U.S. is earlier in the recovery process than other developed economies. Harvest will begin in just a few weeks, and we can expect to see some increase in August shipments compared to the last two years with an earlier start to processing.
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