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

Market Report – September 8, 2005

Per the Almond Board of California position report released today:

• Almost a 27% decrease from the figures from August 2004.

We believe shipments were actually higher than most people in our industry expected. The crop coming in much later than last year significantly contributed to the lower figures. There were far fewer Nonpareils available for second half August shipments, which particularly impacted the quantity of Inshell that India could import. The decrease for August shipments to India accounted for about 29% of the decrease, or 6.16 million lbs. We expect the later harvest could also cause September shipments to be lower, if the California and Mission types come in later than they did with the 04’ crop like the Nonpareils did. Nevertheless, much of the impact on shipments was also due to price. Once we’re able to see the shipment results for October and November, we think we’ll begin to have a clearer picture how much is a result of the product not being available and how much a result of decreased demand.

Crop Situation:

The Nonpareil crop has been coming in lighter than expected throughout the harvest. We believe that many grower’s total expected crop continued to decrease from the time of shaking until they received final shell report, because the hulls and shells were much thicker than expected, particularly in the central part of the state where we’re located. The extremely hot weather during July and early August depleted moisture from the kernels and lowered the weight of the crop. In our area we had over 30 days in a row of 100 plus degree weather (37.77 Celsius). It’s very early to know but we currently estimate the crop will be about 10% below the CASS estimate when it is all counted.

SUPPLY & DEMAND ANALYSIS:

Shipments       984
Carry Out          137.68 – revised in the Almond Board Sept 8 2005 position report to reflect actual loss & exempt figures.

2005 Crop – Preliminary Estimates
Carry In              137.68
Receipts (Net)    768 (800 Gross)*
Total Supply       905.68
Shipments         805.68** – shipments allowed to achieve the desired minimal carry out
Carry Out           100 – desired minimal carry out

* The crop size (“receipts”) used above reflect our estimated crop size, as its now widely believed the CASS overestimated, not knowing we’d have such hot summer weather.

** Above shipments would allow for about an 18% decrease in shipments per month.

OUTLOOK GOING FORWARD:

Grower’s price expectations have increased .05 to .10/lb. over the last week or so. Their price expectations have continued to grow as their crop size expectations have continued to decrease. Many growers are “supply side economists” whose current take on the situation is “the crop’s short, prices have to come up.” They give very little if any importance to demand, which could very well decrease as much as the crop size or more, at current price levels. Another important factor is that the growers are very well financed despite the short crop. Compared with most seasons they have very little incentive to sell for cash flow purposes. The smaller crop means they have sold a larger percentage of their crop than they predicted, which also gives many of them less desire to sell.

There isn’t a very clear direction to the market at this time. It has firmed up slightly over the last week or so, but it has moved based off very light trading, which has made the market more volatile. Buying has picked up slightly over the last couple weeks, but continues to come in slowly as many buyers continue to cover their needs hand to mouth.

©2005 Hilltop Ranch, Inc.