Hilltop Ranch, Inc. - News - Market Report, September 11th 2007

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Quality at Mt. Satake, Jan. 2007

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 – September 11th, 2007

Per today’s Almond Board of California position report:
Shipments reported for August 2007 were a record 94.7 million lbs.

Up 61% from the August 2006 figures & up 20% from the previous record
Domestic shipments were up 27.8% & exports were up 90% - both records

SHIPMENTS/DEMAND:

It seems to be another month where strong shipment figures were anticipated but the actual figures are much higher than expectations. The early crop helped increase shipments, particularly in markets like India where shipments were 15 million lbs. vs. 3 million. Interest for product to ship prior to the Sept 1 implementation date for pasteurization and VASP also contributed to some additional shipments in August. Despite this the shipment figures are still impressive and pricing has firmed slightly following this news.

THE 2007 CROP:

The harvest is still progressing smoothly, early, and with better quality than average. Nonpareil kernel coloring is lighter than last season’s kernels and the average insect damage levels we at Hilltop have received so far are running around 1.5% (vs. 1.8% at this time last season).

In the central part of the state, in-shell yields are running better than ever. We think this is because much of the shell is breaking off during the hulling process.

Sizing has been talked about a lot already but continues to be an important concern. The most plentiful Nonpareil size is 27/30. Both sizing and yields continue to increase as harvest transitions from the southern part of the state to the central areas – but 23/25 AOL remains in very short supply. As anticipated with the NASS report, the kernels tend to be longer this season, though they are lighter in weight and thinner. Its generally accepted that the Nonpareil harvest in the southern part of the state is complete, with yields down about 15% vs. 2006. Shellers in that region are now receiving Butte/Padre and the very preliminary info is that yields are up 10% for these varieties. Nonpareil yields in the central area are reported to be up about 15-20% vs. 2006.

RECEIPTS:

Receipts as of August 31 were 149 million lbs, up about 2.5 times from last season. We think this is more reflective of the crop being earlier than it is of the crop being large. We estimate we at Hilltop are 30% received as of today, vs. 20% at this time last season.

GROWERS:

The limited grower support to sell during recent weeks has contributed to a firming market. Below are some of the factors contributing to this limited grower interest:

Momentum of a firming market (it’s a cycle)
Lower yields for growers in the southern part of the state.
As pricing has become increasingly dependent upon size, many growers want to wait to see what sizes they have before selling.
For most growers their “cash needs” are met at this time.

We understand that many growers in Spain have been reluctant to sell as well. The poor yields and lower prices have been the main discouraging factors on that side of the pond.

THE OUTLOOK:

We think the 1.33 NASS estimate is as good as any at this point. We anticipate a steady or rising market from today’s price levels for 1-2 months. Beyond this time period, it’s really unknown how pricing will develop.

For more information, contact Paul Ewing.

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