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 – April 14th, 2006

We have experienced another mini roller coaster over the past 5 weeks and expect continued volatility based on anticipation of the April shipment numbers and May 10th subjective crop estimate. Prices slowly drifted downward during March and quickly rebounded at the start of April. 2006 crop prices moved up about .35/lb. in one day. A lot of position covering following a trading company’s crop estimate of 970 brought prices up this quickly and they moved slightly higher with the release of the March shipment report on April 7.

2006 CROP DEVELOPMENT:

The weather for crop development during bloom up until this weekend has been less than ideal. With the rains we are seeing some evidence of disease pressure. Due to the continued cold weather over the past several weeks the crop sizing and kernel development is behind where it normally is. There is evidence in some areas of nut size differentiation on the tree that indicates there will be a “drop”. In other words the trees aren’t finished shedding part of their crop. How much of the crop drops off will be better known as we get into warmer weather next week and beyond. The Butte, Padre and other hard shell varieties that experienced more rain during their bloom period, are looking worse than last year. The Peerless and Neplus varieties were very damaged by the frost. The Nonpareils, which were down significantly with the 2005 crop, should be much more abundant with the 2006 crop.

ACREAGE – We believe the 580,000 bearing acre esimate is too low and will be revised upward with the subjective estimate to be released in May. Below is a graph of bearing acreage in California per USDA-NASS:

We are expecting continued strong shipment figures in April and quite possibly beyond April.

SUPPLY & DEMAND ANALYSIS:

2003 Crop
Carry In              162.04 Million lbs.
Receipts (Net)    1011.14 (1032.94 Gross)
Total Supply       1173.18
Shipments         1024.28
Carry Out           148.9

2004 Crop
Carry In              148.9
Receipts (Net)     958.116 (998.038 Gross)
Total Supply       1106.8
Shipments          984
Carry Out           137.68

2005 Crop – Preliminary Estimates
Carry In              137.68
Receipts (Net)    872.68 (909.04 Gross)
Total Supply       1010.36
Shipments         870 * – if shipments continue at an average of the same levels as last year.
Carry Out           140 – expected carryout

2006 Crop – Preliminary Estimates
Carry In              140
Receipts (Net)    960 (1000 Gross)
Total Supply      1100
Shipments          950 * – if shipments were an average of about 9% up from this year.
Carry Out           150

Our number used for the 2006 crop is very preliminary and anything in the 950 to 1.05 range would not surprise us. Spain has not experienced significant frost (though reportedly some in Teruel & Lerida) and is still expected to have a crop in the 100 million lb. range.

California’s 2006 crop continues to trade at a discount of .45/lb. or so from current crop. STD5 for 2006 crop traded Thursday at 1.92 & 1.93/lb. FAS and is trading in the 2.35 – 2.40/lb. range for current crop. If the disparity continues into June/July many buyers will be encouraged to maintain as low of inventories as possible going into the 2006 crop. While the disparity could continue to encourage sellers to sell current crop aggressively, the latest position report shows there were only 213 million lbs. uncommitted (versus 201 last crop year) at the end of March. This is an impressive figure considering how many buyers have been buying hand to mouth.

As re-packers, snack manufacturers, almond butter manufacturers, marzipan producers and other users of almonds begin or continue to lower their pricing to reflect a parity closer to today’s market, we expect a very gradual recovery in demand. Though, some of the demand lost, particularly where almonds serve as an ingredient, will be very difficult to recover.

In order to increase demand to sell the undoubtedly larger crops in the near future, the industry needs to adopt a marketing philosophy designed to bring more price stability into this market. This season’s price collapse has hurt many buyers, some to or near the point of bankruptcy. A financially hurt buyer can harm demand in addition to the many other problems this brings.

Once the industry has restored buyer confidence that it will not sell almonds to their competitor next week for less then what they pay today, we think we will quickly see a return of demand. The buyers are well aware of the increasing bearing acreage base and should be comfortable that we will be able to supply their needs for a considerable time at much more reasonable prices than the prices we started this crop year off at.

©2006 Hilltop Ranch, Inc.