Hilltop Ranch, Inc. - News - Market Report, August 9th 2004

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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

Market Report - August 9th 2004

After a very quiet few months, the almond market has been surprisingly volatile over the past few weeks. Starting around July 26^th, activity really started picking up as many European and North American buyers began looking to cover their needs for the fall. Some in the domestic market are even interested in covering their needs for the entire year. Throughout the summer many in Europe had talked of very high inventories and little need for almonds until new crop. The big surprise was the sudden rush to cover needs for prompt shipments as well. We saw prices rising .01 - .02/lb. per day for about two weeks. Growers became less and less interested in selling to the processors. The harder the buyers tried to cover their needs, the more convinced sellers became that it was the wrong time to sell. Most processors like us off the market until more growers are willing to sell.

Today the Almond Board released shipment numbers for the month of July. They increased by approximately 25%, from 59.4 million lbs. in July of 2003 to 74.4 for July of this year, and prices were 30% higher. For the crop year 2003-04 the industry shipped over a billion pounds for the first time in history. This was expected by most, but the 1.024 was surprisingly high to many. We’re often asked what could possibly be causing all of this…and how long it can keep up.

Impressive growth in the USA market:

The health message has continued spreading, causing increased consumption and new product development by food manufacturers. The Atkins and other low carb diets have led to product development involving almonds in everything from new cereals to low-carb chocolate bars.

Prices of competing nuts:

Essentially all nut prices appear to be up, and the health message that is helping demand for almonds is helping many other nuts as well. Hazelnuts for example often compete with almonds in the European market. With news of a very tight supply coming from Turkey, hazelnut prices are up substantially. Here’s a look at competing nut market prices, all FOB USA:

Cashews, w320: USD 2.80/lb.
Hazelnuts, shelled 13/15: USD 3.10 – 3.15/lb.
Brazil Nuts: USD 3.00/lb.
Pecans, Junior Mammoth Halves: USD 4.50/lb.
Macadamias: USD 6.50/lb.
R/S In-shell Pistachios: USD 2.20/lb.
Walnuts LHP: USD 2.05 – 2.15/lb.

USD remains relatively weak:

Over the past crop year the weakness of the USD versus the Japanese Yen, the Euro, and other currencies has helped lesson the impact of higher prices on certain markets. The Euro still remains quite strong at 1.23 per USD today, about 0.10 above the rate at this time last year.

Small Spanish Crop:

Spain is still expecting a crop of about 10 – 15,000 MT, down significantly from last year and a disaster crop compared with the average of about 70-80,000 MT. Cold weather was main factor. Over the long-term some Spanish growers are tearing out almond orchards and planting olive trees. The small crop in Spain will be made up for by increased California almond shipments into Europe. Spain has become the largest single export market for California almonds.

Despite all these reasons for a strong almond market, it’s still uncertain how well sales and shipments will hold up with current prices. Certain markets are much more price sensitive than others. The in-shell market in China is down nearly 44% over last year and in India it’s down about 11%. Such markets will be watched closely as the monthly shipment reports are released from the Almond Board. Up until now such decreases have been more than offset by the increases in demand in the US, Central and Eastern Europe, and other parts of the world.

The crop is coming about 7-10 days earlier than last year. We began shelling today. It’s still very early to make reasonably accurate predictions on crop size. Late this week we expect to have decent feedback for the Nonpareil variety.

We wish you all a successful season and hope to have more almonds available soon.

Best Regards,

Paul Ewing
Director of Sales
Hilltop Ranch, Inc.

For more information, contact Paul Ewing directly.