The USDA published its subjective 2021 California almond forecast on 12th May, estimating the size of the upcoming 2021 almond crop at 3.2 billion pounds, 3% above last year’s production of 3.1 billion pounds. The estimate is based on a bearing acreage of 1.33 million acres, 6% more (+80,000 acres) than last year, and a production yield of 2,410 pounds per acre, a decline of 3% year-on-year but the third-highest yield on record.
The USDA noted excellent bloom conditions in February and March, with mostly dry weather conditions allowing for abundant bee activity amid long overlapping bloom periods. Weather conditions were also good in April, benefitting the crop further.
The production estimate has mostly taken the almond industry by surprise, with the majority of market participants surveyed by Mintec predicting a crop size of between 2.9 and 2.95 billion pounds. These industry players cited larger decline in yields than forecast by the USDA, following record harvests in parts of the Central Valley last year, as well as higher proportion of tree pullouts. This was in line with existing industry estimates, with the Terra Nova production estimate coming in at 2.9 billion pounds (adjusted with the land IQ area release) and the Wonderful Almonds & Pistachios projecting the size of the upcoming crop at 2.95 billion pounds.
Historically, the accuracy of industry estimates against the final production figure has been close or on par with the accuracy of the USDA subjective forecast. This season, the volume difference between industry estimates and the subjective estimate is the highest on record, leading some within the industry to question the reliability of this season’s USDA forecast.
One seller commented – ‘I don’t understand how they arrived at this figure given that it is based on a phone survey and I wonder if farmer psychology has played into this. It always seems to be the case that farmers overestimate their yields while commenting how bad their neighbours' crops are coming along and this characteristic seems to get more frequent in challenging growing conditions.’
The USDA anticipates the bearing acreage to increase annually by 80,000 acres, although some stakeholders believe this to be an over-optimistic projection, given the farmer’s willingness to remove less productive, older trees amid the subdued market prices. The Land IQ standing acreage release estimated a removal of 47,803 acres which some market participants believe to be closer to 60,000-70,000.
A US producer stated – ‘We haven’t actually managed to get all of our trees pulled yet as the removal companies are too busy at the moment to deal with the demand. This means that it looks like they are still productive but we’ve turned off irrigation and won’t be harvesting. I know plenty of farmers in the same position and this could throw off the use of satellite imagery. As a result, in my opinion, we’ll have to wait for the updated land IQ release in November to get a better idea of the actual removals.’
On the back of the data release, the market fell late last week with trades for standard 5% almonds reported at $1.79-1.80/lb on Friday (14th May), down 7-8 cents/lb from the last assessed Mintec Benchmark Price of $1.86/lb. New crop pricing also fell significantly with trades at $1.80/lb, at parity with current crop and down 10 cents/lb on the week.
The initial subjective forecast will be followed by objective report, to be published on 12th July. The question at this stage is if the objective forecast will align closer with industry figures or if the uncertainty will continue throughout the season as crop receipts come in.
It is worth noting that despite the objective forecast being conducted via physical surveying, the margin of error tends to come in higher than the subjective forecast, which is carried out via a phone survey. Over the past 5 years, on average, the subjective forecast has deviated 3% against the actual production volume while the objective forecast has deviated 6%.
Jara Zicha and Aidan Wright