Spanish Almond Prices Strengthen Amid Crop Disappointment

Published Oct 19, 2023
The Spanish almond harvest is in progress and yields have been disappointing, with losses of more than 30% reported in many regions. On October 17, MAFF estimated production at only 350,688 mt on an in-shell basis, a confirmation that the 2023 crop will be a failure again. This has led to increased almond prices during the peak harvest, a trend observed with more frequency. Globally, almond supply and demand are rebalancing faster than expected. This will have a bullish effect on prices, which are expected to trend higher towards the end of the year.

The Spanish almond harvest is underway, and uncertainties remain about the size of the crop. The warm, dry weather experienced throughout the growing season has impacted production and nut fill. During the harvest, which peaks between September and November, prices are normally in a downward trend. However, prices have started increasing early in Oct-23, as yields are coming in below expectations.

MAFF's Almond Forecast Dips Below Industry Predictions

Earlier this week, on October 17, the Spanish Ministry of Agriculture, Fisheries, and Food (MAFF) shared its almond crop estimate, indicating a total of 350,688 metric tons (mt) on an in-shell basis. Assuming a shell-out rate of 25%, it would be equivalent to a crop of only 87,672 mt on a kernel basis. This mirrors industry estimates, which have pegged the crop as low as 90,000 mt. The harvest started in August, and from the get-go, yields were reported lower than expected. Numerous farmers’ associations expressed their disappointment at production in their regions, stating that yields are 30 to 50% below expectations.

A crop of 87,672 mt would be only 42% higher than the disastrous 2022 crop and far below initial estimates. The pre-season estimate in June by Spain's State Board of Dried Fruits (Mesa Estatal de Frutos Secos) projected the almond crop to be 120,633 mt (on a kernel basis). However, their press statement also indicated potential downward adjustments due to the scorching growing season.

*Production on a kernel basis for 2023/24 is based on a shell-out rate of 25%

Source: MAFF, State Board of Dried Fruits

Prices Increase During the Harvest is the New Normal

In four out of the last five years, the initial pre-season estimate for the almond crop has been overly optimistic. As the harvests commenced, it consistently became evident that production wouldn't meet expectations, and this trend continued this harvest season as well. Traditionally, almond prices tend to decrease during harvest due to the influx of supply. However, in recent years, prices have actually increased during this period, bucking the trend. This shift is evident in the five-year average price trend, which shows a price rise during harvest times. Almond prices are again following this new normal as they already started increasing early in October. Based on historical movements, prices could stay in a bullish trend until the end of the year.

Source: Tridge

Bullish Domestic and Global Outlook

There has been an oversupply of almonds worldwide ever since global production reached 1.74 million mt and 1.68 million mt in 2020 and 2021, respectively. This is much higher than the average of the five preceding years of 1.24 million mt. This was fueled by massive crops in the United States (US), which produce more than 75% of the world’s almonds.

Production in 2022 fell back to a more manageable 1.48 million mt. Global production for 2023 is expected to be close to 1.5 million mt, depending on US production, which has also reported disappointing yields and high rejection rates early in the harvest. Lower global production, combined with a recovery in demand as economic uncertainty wanes, the almond market is experiencing a quicker recalibration of supply and demand than previously projected.

Global almond prices have remained at near-decade lows for over two years due to the previously mentioned oversupply. However, as production decreases and demand rebounds, prices are anticipated to gain considerable bullish momentum towards the year's end, particularly after the Northern Hemisphere's harvest concludes.

Source: INC, Tridge

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