Current Market Report

Market Report Archive

Statement on Salmonella and Food Safety 5/24/04

Ewing Appointed Head of Sales 3/29/04

FDA Approves Qualified Health Claim 7/16/03

Billion Pound Crop Estimate 7/1/03

Letter to the trade 1/10/03

New Processing Facility 9/13/02

Billion pound crop estimate for 2003 is welcome news

Ballico Calif. – July 1, 2003 – The CASS Objective Measurement Report released on June 26^th forecasts a 2003 almond crop of 1.0 billion pounds, a number exceeded only once in the industry – by the bumper crop of 2002. Quite understandably, this report has produced various reactions – from cautious skepticism to outright disbelief. We hope it is correct, and here are our reasons:

1. California needs a billion pound crop to satisfy demand. We have shown in the 2002 crop season the ability to sell and ship an extraordinary tonnage of almonds to industrial end-users worldwide, while at the same time watching prices rise on strong demand. From crop receipts to date (as of the end of May 2003) of 1.08 billion pounds, 849 million pounds have been shipped. Our expectation is that shipment reports for June and July will be extraordinary as well, and that shipments by the end of July will total at least 980+ million pounds for the season.
2. Availability of many popular grades is currently poor – buyers cannot buy goods at either end of the quality spectrum on the spot market today. Nonpareil 23/25 and larger are extremely scarce and Standard Sheller Run are not available at any price.
3. World demand for almonds continues to rise. More world markets than ever before are open and growing. Consumer perception of the almond has never been better, nor awareness higher. The dollar is relatively weak and industry is equipped to buy.
4. The California almond industry has never been more unified in its promotional efforts and marketing direction. The government marketing order known as the Almond Board of California is very effective and a model to other commodity organizations. The existence of a functional Export Trading Company has also enabled extraordinary communication among handlers regarding export market developments, and has helped to dispel the kind of myths and rumors that have troubled the market in years past.
5. Manufacturers have a huge stake in almond availability and cost-effective pricing. After a period in which many cereal and candy manufacturers were writing almonds off as too expensive to include as ingredients, almonds are once again a must-have ingredient – and competitively priced, too. We must continue to match demand in order to keep the cost of our product competitive with other ingredients.
6. Growers need a stable market with profitable returns. The impulse to embrace the high prices that accompany short crops is part of our history, but nothing could be better for the health of our industry than the present scenario – large yields with narrow-but-profitable margins based on strong demand at fair prices. It’s a win-win situation for all concerned, resulting in competition for better quality, better efficiency, and better industry leadership.

The impact on pricing has been minimal. A few panic sellers dropped prices 10-12 cents per pound on a limited number of trades immediately following the announcement. Since then the industry regained 5-7 cents in light trading. With the release of the June 2003 shipment figures in about 10 days, we expect prices to return to pre-estimate levels.

The forecast of 1.0 billion pounds is surprising, especially because it is based on an assumed shortfall in nut set per tree of 14 percent from 2002 – with an even smaller ratio of nonpareil production overall. Yet, kernel weights should be improved substantially from last year’s small sizes, in part explaining the high tonnage expected overall. Add to that a higher density of tree plantings per acre (102 trees per acre) on the same total acreage of 530,000 acres, and we can only hope that these crop expectations prove correct, allowing the California almond industry another season of dramatic growth in demand, product quality, and customer satisfaction.

©2003 Hilltop Ranch, Inc.