Almonds

California weather in December was mostly dry, while the Pacific Northwest has been receiving all the rain. January started with a long sustaining rain this past week and hopefully the weather pattern continues to shift - which is typically when California receives 60% of its annual rainfall. While it hasn’t been completely dry, for the last two years we had already received major storms by now.

With 1.87 billion pounds received to date versus 2.15 billion pounds received at this time last year, the crop remains behind. Growers are unwilling to offer too much at present, waiting for more information before committing beyond the first quarter. Most are content to wait for the crop receipts to complete and look to the February bloom for insight into next year’s crop.

The Almond Board of CA released the “November Position Report” on December 11th. Shipments were strong with 238 million pounds, marking the second-strongest November for shipments in almond history. This is +16.6% over last November’s 204 million pounds and brings total shipments year-to-date to +9.55% ahead of last year at this time. 

Exports continue to drive shipments with 178 million pounds shipped in November, a +24.7% increase over last November. This puts export shipments year-to-date to +13.94% ahead of last year. Meanwhile, domestic shipments fell by -2.0% to 60.4 million pounds versus 61.6 million pounds shipped last November. Domestic shipments are trailing slightly, -1.09% from last year at this time.

New sales for November reached 208 million pounds, a +4% increase over last November’s 200.6 million pounds sold. While new crop offers remain available for close-by shipments through the first quarter of 2024, buyers are also willing and content to follow suit. 

Total commitments for the new crop are currently 647.4 million pounds, a decrease of -6.3% from last year’s 691.2 million pounds. Export commitments are flat (-0.76%) at 378 million pounds compared to last year’s 381 million pounds. Meanwhile, domestic commitments are significantly lower at -13.2%, with 269.4 million pounds versus 310 million pounds a year ago.

As of the end of November, uncommitted inventory was 1.067 billion pounds, down -24.7% versus 1.42 billion pounds last year, a possible indicator that the crop may be smaller than last year. On the other hand, all huller/sheller activity has been completed now. With the crop a month late, this is just another indicator that the crop is smaller than the estimate of 2.6 billion pounds.

Cashews

In-shells:

• Flowering has started at the WAF crops in Ghana and the first flush is expected to be available by mid January. It remains too early to make a clear forecast of the Ivory Coast crop, but the government has start reviewing the opening price, which is expected to be released around mid February. It’s still to be seen what impact the heavy showers during Q4 of 2023 will have on the crop size and quality. However, looking at how the weather has played a major impact in recent cocoa crops and how it has driven the prices to an all-time high, we need to keep a close watch on the cashew crops in Ivory Coast.
• Availability of good quality in-shell continues to remain limited for the Asian processors as Tanzania in-shell is still afloat and not available for another few weeks.
• Auctions in Tanzania are coming to an end. Around 220,000-240,000 metric tons have been auctioned and around 45,000 metric tons have been covered by local processors. Both numbers combined are, as well, the expected crop size for this season. From the auctioned volumes, around 50% is already shipped and the remaining is expected to move out in about a month. Traditionally, the majority of the crop will flow into India with a 70/30 ratio versus Vietnam.

Kernels:

• Destination stocks remain tight and more quality issues are starting to rise. This clarifies why larger destination processors had to step into the spot markets to cover their urgent needs to meet their nearby commitments for the end customer.
• Demand continues to be strong throughout the Europe region and it’s likely to hit double digit growth compared to last year - promotions clearly supported the numbers. China also continues to grow at a decent rate, driven by skinned roasted kernels. The Middle East was strong until early November, but with current regional hassle, demand has turned sluggish. The U.S. region came back from deep negative numbers and is expected to finish the year below earlier expectations.
• Overall, pricing for Kernels still remains very favorable and historically low for the last 15 years. That’s why there is much more demand entering for far forward periods, for example, the second half 2024 and even into early 2025. In-shell processors are not keen to offer for such a far forward period before they have an understanding on the crop quality and opening prices across the main growing regions.

Walnuts

Crop receipts for walnuts in November hit 778,270 tons, a 7% increase from last November and exceeding the 5-year November average by 12.7%. This surpasses the original crop estimate of 760,000 tons by 18,270 tons and the 2020 November record of 758,599 by 2%. We are now on track to potentially witness the largest U.S. walnut crop ever recorded.

November’s shipments continued the positive trend of the last few months, totaling 89,434 tons, a 5.2% increase from the same period last year. While domestic shipments remained strong, exports saw a 5.1% decrease compared to last year. However, key markets like Italy (+42%), Turkey (+30%), and India (+82%) displayed year-over-year export growth. Total shipments now stand at 213,622 tons, up 7.9% year-over-year.

Reported commitments in November reached 260,235 tons, a 6.54% increase from the same period last year. Stable pricing throughout November likely drove previously cautious buyers to enter the market, leading to a notable increase in new sales for the month, totaling 137,448 tons, up 45.9% versus last year. The walnut total supply is estimated to be 62.3% sold.

Chile: Chile’s 2023 crop volume is expected to fall below initial forecasts. The crop receipts for 2023 are projected to be approximately 170,000 metric tons, which is a 9% decrease compared to last year’s crop of 187,000 metric tons, and a 12.5% decline from the anticipated 192,000 metric tons for this year. Shipments FTM of November were down 10% versus last year, but shipments are still outperforming by 3% year-over-year. Chile has made significant gains in India (+100.5% year-over-year) but have underperformed in ME markets (-19.6% year-over-year). The 2023 crop is now estimated to be 98.1% sold.

China: China’s projected 2023 crop capacity remains flat at 1.4 million metric tons; however, the actual harvest outcome is yet to be determined. Chinese walnut production is primarily driven by smaller farmers, posing challenges in collecting accurate data. Nonetheless, the increase in labor and capital costs mirrors the difficulties faced by the U.S. industry. For their 2022 crop, the projected carry-out is set to rise to 120,000 metric tons, resulting in a forecasted total supply of 1.52 million metric tons for the 2023 crop, signifying a 5% increase of 70,000 metric tons compared to the 2022 crop total supply.

Hazelnuts

Supply side:

• The crop outlook in Turkey was revised from 800,000 metric tons to 650,000 metric tons. We believe this supply, too, is considered adequate for the demand, given the large carry-over and a weaker than usual demand.
• The largest buyer increased its buying price from 95 TL/kg to 98.5 TL/kg earlier this month; in line with the depreciating currency. As per reports, it has now covered a substantial portion of its annual requirement.
• We saw unprecedented price movement upwards in the initial phase of the season, where a speculation of a shorter crop led farmers/traders to hold the supply. Prices have now subsided from over 100 TL/kg in-shells in early October and have been stable around 95 TL/kg for most of December. With the TL depreciating against the USD/EUR, prices have come off almost 15% for the buyers.
• The TMO continues to carry almost a 120,000 metric ton crop, and its future move is also expected to have a significant impact.

Demand side:

• We continue to see most buyers preferring to cover only their immediate requirements. 
• We witnessed buyers covering for their Q1+Q2 requirements before the holiday period, thus increasing the demand for the crop in a shorter period. However, we continue to see weaker than normal demand patterns across various industries.
• Turkish exports for the season as of the end of December stand at 106,000 against 120,000 for the same period last year – lower by almost 12%. We expect demand fundamentals to be tight.

Pistachios

Pistachio crop receipts for November remained steady at 1.49 billion pounds, exceeding the INC’s forecast by 35% and marking a 69% increase from last year’s crop of 884.1 million pounds. The market reacted to this huge U.S. pistachio harvest with the lowest prices seen in over 15 years. It shows how upcoming larger pistachio crops might shape the industry in the years to come.

November shipments remained strong at 164.5 million pounds, representing a 126% increase compared to the same period last year. Notably, exports continued to drive the market, reaching 144.7 million pounds, up by a significant 177% from last November, while domestic shipments were down 4%, at 20.6 million pounds. Year-to-date total shipments reached 345.9 million pounds, reflecting a 54% increase compared to the previous year.

Crop receipts seems to have leveled off and will likely not reach 1.5 billion pounds. This stability could potentially contribute to maintaining pricing in the immediate future. However, to manage the additional 605 million pounds (+69%) in inventory, the industry will need to increase shipments. Currently, only an estimated 24% of the total supply has been shipped. The approaching months will be a critical test for global pistachio demand.

Macadamias

Key developments in major macadamia growing regions:

• South Africa: Crop was lower than earlier projected volume and ended at 78,000 metric tons due to late stink bug issue. The weather conditions during the harvest also made it challenging for farmers to access orchards resulting in volume drop. Even though 2023 started with a sluggish demand, sales increased during the latter half with major NIS & Kernel getting traded in Q4. Processors are currently holding less stock, which has led to lower carry-over inventory for 2024. The port congestions in South Africa has also eased down, resulting in timely shipments for December. 
• Australia: The total production of macadamia’s in 2023 is estimated to be around 48,000 metric tons, which was closer to the recent forecast. Australia’s quality remained excellent this year, however, the volume decreased. Lower farm-gate prices and reduced yield against expected caused challenges for macadamia growers in 2023. The current weather in Australia seems favorable for flowering of the new crop and is expected to result better yields. Australian in-shell remains in good demand from China for new year requirements.
• Kenya: New crop arrivals have started in small quantities in some regions - the quality looks normal and the crop is expected to be marginally higher than last year. The Kenya government’s move to allow in-shell trade might lead to low availability of in-shell for local processors. The in-shell trade from Kenya is expected to increase going forward in 2024.
• China: The current harvest season in China is near its end with an estimated production of 56,000 metric tons. In-shell price has been stable despite this large volume due to lower crop supply from Australia and South Africa. China has been the major consuming market which drove the market price in 2023.

Demand Trends in 2023: 

• Demand for S1A & S4L is quite strong due to the New Year demand from China & Taiwan markets for roasted & coated macadamias.
• Other South East Asian markets have also remained active the past few months with major interest for S1 & S4 grades.
• NIS price has been quite firm due to high in-shell demand from China.

Peanuts

United States

Harvest is complete. National tonnage graded (as of December 22nd) by Federal State is being reported as 2,932,476 farmer stock tons. There will continue to be tons added in minimal amounts for a few more weeks, so total number could end up around 2.95 million tons. 26,540 tons of this so far is Seg 2/3 (with 24,115 tons being runners), and as mentioned last month, we are seeing aflatoxin from some areas. These issues will even further reduce edible product available. U.S. demand continues to hold up fairly well in the 3 million ton range. Though we have an estimated ~1.016 million ton 2022 crop carry-out, production below 3 million, especially with quality issues, creates a very tightly supplied market as we move forward. It is pertinent that peanut acres do not decrease for 2024 plantings, and in fact we could use an increase (especially if there are yield issues again) to get the U.S. back to a comfortable supply. 

Activity in the U.S. kernel market is quiet right now with the holidays and will likely continue to be quiet until the Peanut and Tree Nut Processors Association (PTNPA) conference starting this week. Some buyers have recently covered their remaining needs (or at least a majority) for the first half of next year, though most shellers remain comfortable in their current position and are not eager to offer. Offers for prompt or nearby positions are extremely limited, with some materials unavailable. Blanching slots remain extremely tight throughout Q1 of 2024. Kernel prices continue to hold firm in the upper $0.60’s to lower $0.70’s.