US almond prices hit an 11-month high earlier this week driven by ongoing weather concerns over the coming crop and several successive months of strong shipments.
The Mintec Benchmark Prices for standard 5% almond [Mintec Code: NAL1] were assessed at $1.81/lb on 16th March 2023. This is the highest the Benchmark has been since 14th April 2022 and 36 cents/lb higher than the assessment on 12th January 2023, which was the lowest price since 2003.
A succession of storms and cold weather over bloom, the period during which almond trees are pollinated (typically occurring in mid-February and mid-March), has limited bee hours and led to damage to trees and orchards. One handler stated, “the bees have had so little time to fly, some of them seem to be starving in their hives. I know people say there isn’t a strong correlation between bee hours and yield, but I haven’t seen conditions this bad for this long before, during bloom.”
This sentiment was repeated extensively by Mintec’s industry contacts, with one almond exporter describing the situation as “the worst conditions for bloom I’ve ever seen in the decades I’ve worked in the industry.”
Selling interest remains limited as sellers continued to size up the potential impacts of the storms and poor weather on the coming crop. At the same time, buyers continue to look to lock in supplies in a rising market, pushing prices even higher.
The full extent of the impact on crops cannot yet be ascertained and market participants are eagerly awaiting the first crop estimates from industry to be released in the coming months. “Until the trees get further along, we won’t have an idea of how badly impacted production will be. It’s a wait and see game at this point, so the first few estimates that come out will have everyone’s eyes on them,” a US exporter said to Mintec.
The precipitation from the storms has provided benefit for groundwater recharge and reservoir/snowpack replenishment, with one trader stating, “the rain is providing some relief to the parched ground, which is the only good thing I can say about the current weather conditions. At the same time, with the volume of precipitation we have had, it is unlikely that all of it will be able to be stored or captured, which is frustrating.”
The US drought monitor pegged 36% of California as in moderate-severe drought on 14th March, a significant improvement from the start of the year when 98% of the state was rated as in drought conditions. A large proportion of the almond growing area has been in drought conditions since 2020 and several growers stated to Mintec that it will take some time for the trees to recover from the stress, despite the increased water availability.
Despite the recent rally, almond prices remain well below the cost of production, with those within the industry describing the crop as “overplanted.” While yields for the coming crop are expected to have taken a hit, the general sentiment is that more trees will have to be pulled over the coming seasons to rebalance supply and demand long term.