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Statement on Salmonella and Food Safety
5/24/04 Billion
Pound Crop Estimate 7/1/03
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Market
Report - December 9th 2004
In this year’s almond market we have seen a “perfect storm.” Expected final crop size has been shrinking over the last few months while shipments remain strong. The USD weakened further against other currencies, particularly the EURO. Prices of competing nuts remain high, though the almond is certainly no longer the cheapest tree nut. We’ve even seen news of a major default surface. U.S. Crop Size Total crop receipts reported to the Almond Board from August 1 to November 30, 2004 are reported to be 910,712,462 lbs. Since most of the crop arrived relatively early this season, we believe about 93-95% of the total crop has already been reported and shown in this figure. Using 94%, we’re now predicting this year’s gross crop size at about 968.8 million lbs. Original CASS estimate was 1.1 Billion and then it was revised to 1.08 in June. By the time we released our market report on October 18th we were predicting a crop of 1.015 billion lbs. If today’s prediction of 968.8 million lbs. is correct, we would have a marketable crop size of about 930 million lbs. Lack of Supply from Other Origins Spain’s crop has been a disaster as expected. Even record crops from the southern hemisphere in February/March could not help the situation much as California should produce 85-90% of the world supply this year. Shipments In October we experienced our first shipment decrease, down about 10% from October of 2003. However, the market remained firm as total shipments for the season were still up about 4% from the previous season. More importantly, there became more widespread concern about total crop receipts. Most in the industry expected the November shipment numbers to show another decrease from that month of the previous year, but a firm market was still expected because it was thought crop receipts would continue to be a concern. The numbers released for November 2004 show shipments up about 7% over November 2003. We think this surprise sent the market up .05 to .10/lb. Currency Fluctuations USD has continued to weaken against the EURO, Indian Rupee, Great British Pound, and other currencies in major almond markets. Since our August 9th report, it’s gone from around 1.23 against the Euro to around 1.33 USD per Euro. This has offset some of the price increase obviously, but those who have been waiting over the past several weeks for an even weaker USD before covering their almond needs have seen the almond prices move up much faster than the USD has weakened. Default A commodity trader out of Northern California reportedly sold short about 160 containers back when prices were about USD 1.00/lb. below today’s current levels. This information became more widely well known a few weeks back. We think most or all of the estimated 7 million lbs. contracted will be defaulted and the buyers will need to cover this volume elsewhere if they haven’t already. The needs of these buyers for standard 5% quality almonds, the grade most commonly speculated on, has been a real driving factor in the market. Updated Estimate for 2004 Crop Supply Situation: Carry In 130 Receipts (Net) 930 (968.8 Gross) Total Supply 1050 Year 2004 Crop shipments through November 30 were 426.58 million lbs. Total reported unshipped commitments were 274.98 million lbs. Assuming a net crop size of 930 million lbs. and a needed carry out of the same 130 million lbs. for a reasonably smooth transition, as of November 30 there were about 228.44 million lbs. of almonds available to purchase from California handlers for the 8 months to come. The industry needs shipments to drop off about 20% per month on average to have a reasonable carry-out. With so much of the crop already sold earlier at much lower prices, we don’t expect shipments to begin truly dropping off for at least a few months. We expect to go into the next crop year with a much emptier pipeline than we did this year. In conclusion there are too many bullish factors out there for us to predict much softening in the almond market for some time. We expect almond prices to remain high for at least 15 months and world supply to remain tight until September of 2006. We know that when the Almond Board advertises on any given day, it takes about 12 to 15 months for the industry to gain the benefit from this investment. So the Almond Board is hard at work increasing demand, even though the industry does not need more demand now, we are well aware that we should see 1.5 billion lbs. within 4-6 years. Best Regards, Paul Ewing Director of Sales Hilltop Ranch, Inc. For more information, contact Paul Ewing directly. ©2004 Hilltop Ranch, Inc. |
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