Australian Almond Industry Faces Tight Stocks Amid Export Surge

Record Exports

Eight months into the Australian almond 2023/24 marketing year (MY), exports have reached a record cumulative of 85,379 metric tons (mt), on a kernel basis. This is 11% higher than at the same time in 2022/23 and 33% higher than the five-year average. While exports have trended higher over the long term, in correlation with production, two main factors boosted this year’s strong exports.

First, the United States harvest, which usually starts towards the end of August, was delayed by more than two weeks as a result of cool weather earlier in the growing season. With the delayed crop, demand for Australian almonds remained high in Oct-23, a time when US almonds normally close the window on Australian exports. This has been amplified by buyers' preference to only cover short-term commitments. The delay in the US crop prompted buyers to turn to Australia, the world's second-largest almond producer.

Secondly, the Australia-India Economic Cooperation and Trade Agreement (AI-ECTA) reduced the import tariff on Australian almond kernels from IRP 100 per kilogram (kg) to IRP 50/kg for a quota of 34,000 mt. The trade agreement, which took effect in Dec-22, has led to an increase in India’s almond kernel imports. India typically imports nuts in-shell, as the Indian government promotes the shelling industry for its socio-economic benefits. In the first eight months of the 2023/24 MY, India imported 4,388 mt of almond kernels, compared to less than 300 mt on average in recent years. While this is still far from the quota that benefits from these tariff cuts, it is expected to increase over the long term.

Tight Ending Stocks

The strong exports will lead to very tight ending stocks. Australia’s 2023 crop reached only 103,381 mt, the lowest in five years, as a shortage of beehives during pollination back in Sep-22 and adverse weather conditions during the growing season led to a mediocre crop. The marketing year started with large inventories of around 29,000 mt, which could decrease significantly when the marketing year ends on February 29, 2024. In the first eight months of 2023/24, domestic shipments already reached 17,388 mt, and with export shipments, total usage already stood at 102,788 mt. With four months left in the 2023/24 MY, cumulative exports could well reach 105,000 mt, while domestic shipments could top 25,000 mt. This would leave nearly no almonds in stock before the 2024 crop comes in.

Production Estimates for 2024

It is still early to make accurate estimates for the 2024 crop. Based on baseline estimates, production could top 180,000 mt in 2024. However, this is based on the area planted and barring any adverse weather events. Despite ongoing challenges with varroa mites, the pollination of almond trees proceeded relatively smoothly. These insights are outlined in Australia's Short and Mid-Term Almond Production Prospects, and a large crop in 2024 remains a possibility, especially given that trees were able to “rest” due to the low crop in 2023, which often results in a bumper crop in the following year.

Up until now, the weather this season has generally been moderate. Nonetheless, in the Sunraysia region of Victoria, which encompasses approximately 56% of almond areas, temperatures have consistently exceeded the long-term average by more than 2° C over the past 90 days.

Another factor to consider is the low prices farmers received in 2023, worsened by the poor yields. Faced with financial challenges, farmers sought to cut costs, resulting in reduced inputs that could potentially have a negative impact on yields. Nonetheless, prices are expected to increase from historical lows as the US and Spanish crops fall short of initial estimates leading to a rebalancing of supply and demand globally.