Opinion

US Almond Crop Commitments Drop to Lowest in 5 Years

Almond Kernel
Raw Almond
United States
Published Nov 17, 2021
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After record exports throughout the whole of the 2020/21 MY and even the start of the 2021/22 MY, almond shipments and commitments are turning on the brakes as the persistent drought and logistic bottlenecks take their toll. At the end of October, only 44% of the marketable almond crop has been sold and committed, compared to 50% last year and 47% the 5-year average. Owners of almonds are expecting prices to climb higher and are holding on to their stock, as California’s drought continues. Shipping problems in the US also hampered exports in October, normally the peak of the export season. Add to that the second-biggest crop on record, and almond storage might remain full for quite some time.

Accuracy of USDA almond crop estimates

Every May the USDA releases its subjective estimate for the US almonds crop, which is mostly based on the area that is under fruit-bearing almond trees. An objective almond crop estimate is released in July, with the focus shifting from area to yields. This remains the official estimate until the next May.

These estimates are extremely accurate given that they are released even before the harvest starts. That being said, they are estimates. Crop receipts are the actual volumes of almonds that come from the orchards. These crop receipts are reported by the Almond Board of California (ABC).

As mentioned, these July estimates are fairly accurate and on average are within 6% of the final receipts. In 2018/19 the crop estimate underestimate the crop by 8% and in 2019/20 overestimated by 14%.


Source: ABC, USDA

So how does the 2021/22 crop estimate compare?

The almond harvest takes place between August and October. When handlers receive almonds, they need to fill in form ABC1 and submit it to the Almond Board of California. According to the Almond Board, the ownership of the almonds might remain that of the grower, or be transferred to the handler. It depends on the type of contract between growers and handlers. Either way, the handlers are responsible for submitting the numbers to the ABC. Once this form is received, it is added to the monthly tally of receipts and published in the ABC’s monthly industry position report.

Receipts of almonds to the end of September average 65.9% of the total receipts for the year. The slowest harvest was in 2020/21 when only 58% of the crop was received at the end of October. The fastest was in 2016/17 when 73% of the crop was already received by the end of October. This year’s receipts to the end of October, as a percentage of the crop estimate is 64%, squarely between the high and low and consistent with the 5 year average of 66%. This is an indication that the 2021/22 crop estimate is most likely spot on. If it can be assumed that the crop estimate is accurate, historic data from previous seasons can be fairly compared to the first three months of this season.


Source: USDA, ABC

Domestic and Export Shipments

The ABC publishes monthly position reports, which include data on receipts, domestic shipments, export shipments, domestic commitments, and export commitments. With all of this information available, an accurate comparison can be made between what is happening this season and what happened in previous years.The October position report was published last Thursday (11 November) and contained data until the end of October.

Looking at the domestic shipment graph should be pleasing for both farmers and almond processors. Each year domestic consumption is higher than the previous, and shipments are regular and constant. The first 3 months of 2021/22, though, is a tiny bit (1%) lower than in 2020/21.


Source: ABC

Export shipments are much more erratic as there are more factors influencing the sales and shipments. The record crop of 3 billion lbs (1.4 million MT) in 2020/21 led to subsequent record exports. Even the first month of the 2021/22 season was a monthly record, and September and October were both the second-highest in history, behind that of last year.


Source: ABC

Commitments falling behind

The ABC also publishes Commitments. Simply put, these are almonds already committed for delivery in the future. Thus, given this data, a fair picture of the proportion of the crop that has been sold at various points in time can be determined. For historic data, total almonds delivered can be used for calculations, whereas for this year’s data the crop estimate can be used, given that the crop estimate is most likely very accurate.

To calculate the total amount of marketable stock, carry-in is added to the total receipts (and the crop estimate for this season). Total shipment of total marketable stock plateaus at 91%, with the difference being the carry-over to the next season. Given that this crop is most likely 2.8 billion lbs, and carry-in was 608 million lbs, the total marketable stock is roughly 3.4 billion lbs. At the end of October, domestic and export shipments combined were 652 million lbs, or 19.1% of the marketable stock. Domestic and export commitments were 748 million lbs, or 21.9% of the marketable stock, adding up to 41.1% that has either been shipped or committed. This is the lowest percentage over the last 5 years.


Source: ABC

Source: ABC

A combination of reasons

There are different reasons for the slower shipments and commitments this season. First off is the huge carry-over from the previous season and the massive crop. Even though the crop was lower than initial estimates, after drought ravished California for most of the growing season, 2.8 billion lbs is still a huge crop, and add to that the 608 million lbs carry-in and it is going to be a busy season for traders to clear space for the next crop.

Another reason for the slower sales is that both farmers and handlers who are owners of the almonds will be reluctant to sell given the continued dry conditions in California. There are already many concerns that the next crop will be reduced with the ongoing drought. This means prices will likely react by climbing higher should the drought persist.

Yet another cause is the logistic difficulties the US is facing. The shipping industry is struggling to clear up backlogs and these logistic issues might persist throughout the peak almond export season, slowing export shipments and commitments. 

Sources

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