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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

Market Report – October 16th, 2006

Per the latest Almond Board of California position report:

Shipments reported for September 2006 were approximately 110 million lbs. This is about 35% above the September 2005 figures.

The almond market has been firming up for the past 3-4 weeks and pricing has increased by approximately .20/lb.  The momentum in the market began changing as some buyers realized there was only so much downside potential likely for the near future, and the anticipation and speculation grew that September shipping figures would be very strong and the AHPA survey results would likely only decrease.  This brought heavy demand to the handler level at a time when many handlers were busy packing existing orders and figuring out what sizes and qualities will be available to sell.

CROP/SUPPLY UPDATE:

The AHPA (Almond Hullers & Processors Association) survey results were released on Friday and show the crop coming in just below the NASS estimate of 1.05 billion lbs.  We anticipate that when it is all totaled, the crop will at least reach the estimate since there is likely increased bearing acreage that’s not accounted for in the NASS estimate or the AHPA survey results (as was the case last season).

Unlike most seasons, we have seen many Butte and Padre orchards harvested and ready to ship prior to Carmel types.  We believe both the Butte/Padre and Carmel types will be down from the estimate and down slightly from last season.  We see a lot of variability in yields between orchards and regions but most growers’ yields are equal to or below the 2005 yields for these varieties.  The AHPA results and individual grower reports indicate the Nonpareils will have a huge increase in crop size from last season, particularly when compared with other varieties, and this has helped decrease the spread between Nonpareils and the other varieties.  Harvest is not complete for all varieties and there is concern that rains could damage some of the crop. Kernel sizing with Nonpareils and Carmel types are primarily in the 23 to 30 ranges.  Most Cal and Mission types are coming in primarily in the 25 to 34 ranges. 

SUPPLY & DEMAND ANALYSIS:

2003 Crop                                                               2004 Crop
Carry-In              162.04 Million lbs.                        Carry-In             148.9
Receipts (Net)   1011.14 (1032.94 Gross)                Receipts (Net)    958.116 (998.038 Gross)
Total Supply      1173.18                                       Total Supply     1106.8
Shipments         1024.28                                        Shipments           984
Carryout              148.9                                           Carryout             137.68
 
2005 Crop                                                              2006 Crop - Preliminary Estimates
Carry-In              137.68                                         Carry-In              112.22
Receipts (Net)    883.44 (910.758 Gross)                Receipts (Net)  1018.50 (1050 Gross)*
Total Supply     1021.12                                       Total Supply     1130.72*
Shipments         914.23                                         Shipments          
Carryout            112.22                                          Carryout         

*Estimate only.  Assumes crop size is in line with NASS' objective estimate.

In talking with buyers and looking at the shipping figures we can see that demand is already starting to recover and many buyers say we should see even more signs of recovery January onward, at least if price levels remain in the range they are today.   From May until the arrival of the new crop, the price difference between August shipments and October shipments reached as much as 1.00/lb. with .75/lb. or so difference between contracts for August vs. September shipments.  This lead many buyers to delay their needs and minimize their carry-in by as much as possible and we believe this is largely reflected in the September shipping figure and will be somewhat reflected in the October shipping figures (which are expected to be strong too).  We do not believe consumption has recovered by 35%.  Once we begin to see the shipping figures for November and beyond we will really get a better idea of market demand.
 

CONCLUSION:

Barring any major surprises, the market is likely to remain firm for at least the next 1-2 months.  Within the next few weeks there should be more offers on the market as handlers get a better idea of what they have available to sell and more handlers get past this period of tight capacity for sales of nearby shipments. Around the second week of December we should get a better idea of demand after we see the November shipment figures.  We believe continued strong shipment figure reports, which show us on track to ship 1.00 to 1.05 billion lbs. (for a 1.05 to 1.10 billion lb. crop), are needed to keep pricing more or less in the same range as that we see today.

Previous Market Reports:

©2006 Hilltop Ranch, Inc.