Almonds

Overall, February turned out to be a very wet month for California. In fact, it was the 10th wettest since record keeping began 128 years ago. As a result, this puts rainfall at 106% to the historic average. New water allocations were announced a couple weeks ago giving farmers throughout the state an additional 5% increase, but is likely to increase again given the allocation review was based on reservoir levels a few weeks back. Additionally, another large storm hit California last weekend - winter is not over yet and all of California’s reservoirs are well ahead of their capacity levels for this time of the year. Meanwhile, the almond bloom started mid-February and now the bloom had all but concluded just in time for last week’s storm. Generally speaking, the bloom has been considered a good one, especially compared to last year when we saw this kind of weather right at the start of the bloom. Now, we must watch for any March freezes coming up. 

The Almond Board of California released the “January Position Report” on Friday, February 9th. January shipments set a record for the month at 235.92 million pounds, up 2.7%. Crop receipts also rose by 163 million pounds with 2.39 billion pounds now received, yet down 3.39% from a year ago. This indicates a crop size slightly above 2.4 billion pounds, however off from the 2.58 billion pounds received last year and estimate of 2.6 billion pounds. This is the third year in a row of declining almond production in California. To date, the industry has shipped 1.38 billion pounds and stands ahead of last year’s shipments year to date +8.58%. 

Domestic shipments were 62.89 million pounds, down 5.4% versus last year’s 66.50 million pounds. Domestic shipments remain slightly down versus last year’s crop, being down .57% yearover-year. However, January has been the largest shipment number for the domestic market so far during the 23/24 crop year. The industry will work to build on this for the second half of the crop year. Export shipments were 173.03 million pounds, which is 6.1% up versus last year’s 163.16 million pounds. This shipment number was a record for January. Export shipments continue to outpace the last crop year and now sit at 12.24% up year-to-date. 

Meanwhile, sales & commitments reflect a market taking a measured approach. Total sales for the month were 235.91 million pounds, up 14% versus last year’s sales of 207.64 million pounds. The California almond industry has continued to sell even as prices have moved upward over the last 2 months. Overall, this has helped keep shipment numbers higher than the previous crop year. Even in the midst of bloom, the almond industry has continued to sell and we do not see these sales numbers dropping off in the coming months.

Commitments for the 2023 crop year stand at 637.42 million pounds, which is down 24.1% versus the 840.17 million pounds this time last year. Commitments for the 2023 crop year have stayed relatively consistent as California continues to only offer for nearby shipment months. We have seen them as low as 621 million pounds and as high as 677 million pounds. Even with consistently high sales over the crop year, we don’t expect commitments to improve from this range due to California’s selling strategy. Uncommitted inventory currently sits at 1.126 billion pounds, down 2.2% versus last year’s 1.151 billion pounds. Uncommitted inventory remains slightly down to last year, while buyers and sellers have 200 million pounds less bought/sold versus this time last year. 

Cashews

In-shells:

• India’s local crop being late has urged the local industry to start sourcing from the very first WAF arrivals. In-shell demand remains strong for the early shipments around the February/March period, whereas a lot of February commitments have already been moved into March due to late crop arrivals. This continues to put pressure on spot availability for new crop in-shell cashews.
• The Ivory Coast declared the minimum farmer price, which was slightly lower versus last year and will again be absorbed by much higher freight rates. Also, the Ivorian government decided to put export tax on in-shells, which won’t make the overall price any better than last year. 
• In several regions within the Northern Hemisphere, crops are about three weeks late versus last year. Ivory Coast is reporting a late crop, which also lowers out-turns for the first flush (from 50/51 KOR to 48/49 KOR). The kind of impact this could have on the overall crop size and quality in the country will be known in the next couple of months. The inshell industry now needs dry weather in the coming months for proper sun drying.

Kernels:

• Kernel consumption remains strong and majority of the main destination markets have closed the year in positive numbers. This indicates that demand for cashews is and will remain strong as shelf prices are lower versus earlier highs. Furthermore, ongoing promotions and consumers continue to look into different diet patterns - more vegan and simplified solutions.
• The spot squeeze in main destination markets continued during February. All main grades got traded at significant premiums subject cargo being available for immediate collection. At a first glance, the Red Sea hassle was seen as the root cause, but looking at how the industry continues to cover and inquire on spot indicates there is much more ongoing than just some supply chain disruptions being claimed for the last few months.
• Interest to cover way forward is abnormally strong, but the challenge is still finding the support for the same. With the in-shell season not giving great signals at this stage and the uncertainty at what level freight rates will stabilize and the ongoing hand-to-mouth coverage due to earlier short-selling, we will likely see a much more active season compared to recent years.

Walnuts

Walnut Crop receipts for January hit 820,966 tons, a 9.8% increase from last January and exceeding the 5-year January average by 14.8%. This surpasses the original crop estimate of 760,000 tons by 60,966 tons (+8%). This crop is the largest recorded walnut crop in California history. 

January shipments continued the strong performance of recent months, totaling 89,955 tons, a 23.1% increase from the previous January and the strongest January of the last 10 years. This was primarily driven by exports, which totaled 68,614 tons, a 32.2% increase versus last January. Total shipments have now reached 399,044 tons, reflecting a 15% year-over-year increase. 

Reported commitments in January reached 238,513 tons, a 9.02% increase from the same period last year. Pricing remained stable in January, with some increases reported among some packers with lower inventory. New sales for the month reached 87,650 tons, a 66.2% increase versus last year. Our forecasted carry-out currently stands at 140,000 tons. This will be contingent on shipments continuing the current pace.

Chile: Chile will begin harvesting their 2024 crop this month and early crop projections are yet to be received. They harvested 176,448 metric tons in 2023.

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:

• Hazelnut prices have touched 8,00 $/kg – primarily due to hoarding/constrained supply from the farmers/traders. These price levels are the highest in the last five years.
• The season has now entered the second half. Unlike a normal season, we still see a lot of inventory in Turkey. Our expectation is that Turkey is still carrying 450,000 metric tons, which 120,000 is in the hands of the TMO.
• Ferrero is currently sourcing its balance requirement, which has further strengthened the market. We expect that they are now substantially covered for the season.
• The Exporter’s Association is expected to declare the crop size basis of the flower count by next week. Initial indications are that the crop growth is good. A warmer-than-usual February means that the crop will be subject to damage due to frost for a longer period. However, these are only speculative discussions.

Demand side:

• Most buyers have covered their Q2 demand, but are still uncovered for Q3. This has also added fuel to the heated market for some time. Though the volumes are low, the sentiment is that Europe is uncovered and is making the farmers hold further.
• Turkish exports for the season as of the end of January stand at 163,000 against 178,000 for the same period last year – lower by almost 8%. We expect demand fundamentals to be tight with inflation woes and other ingredient prices like cocoa at an alltime-high.
• We continue to see most buyers preferring to cover only their immediate requirements due to high prices. 

Outlook on pricing: Prices continue to climb in February despite a good stock level and weak demand. This is primarily due to supply being constrained by farmers and traders. The largest buyer has now covered a substantial portion of its demand post February and the 2024 crop news will take a centrestage as concerns around the stink bug and frost will get discussed.

Pistachios

Pistachio crop receipts for January remained flat 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. This harvest stands as California’s largest crop yet and surpassing the previous record set in 2021 of 1.16 billion pounds. 

January shipments were strong, reaching 103 million pounds, a 46.9% increase compared to the same period last year and a 68.2% yearover-year growth. The driving force continues to be exports, with January export shipments totaling 80.8 million pounds. Exports are now up +97.2% year-over-year. Notably, shipments to Europe saw a yearover-year increase of 102%. To date, approximately 37% of the total inventory has been shipped.

While the export performance has been phenomenal, domestic remains down -1.5% yearto-date, which is a small cause for concern. While domestic demand is struggling across nuts, it is especially perplexing to not see pistachio shipments up in a year where the price is lower, and supply and promotions are abundant. 

Demand for pistachios remains healthy, with shipment pace exceeding the increased supply, leading to relative stable pricing. It is still too early to predict next year’s crop size, but speculation to a potentially smaller new crop has resulted in some packers holding product in hopes of obtaining a premium in the scenario where a shorter crop materializes. 

Macadamias

Key developments in major macadamia growing regions:

• South Africa: Harvest has started in all major growing areas and farm price has increased slightly due to the good demand. The price of certain integrifolia varieties are fetching higher premiums above others, hence farmers have to pay higher attention on planting better varieties in the future. Demand has increased significantly this year after the increase in buying from China and low carry forward stock. South Africa’s estimated overall crop size in 2023 is 77,000 metric tons, which was a considerable increase from 69,000 metric tons in 2022. The initial report suggests the crop will further increase to 86,000 metric tons in 2024 due to new plantations and better yields from existing plantations. 
  
• Australia: The 2024 season commenced with excellent soil moisture and weather conditions across all macadamia growing regions. The new crop prospects looks highly encouraging as weather conditions were good for flowering in early spring. Traders have already started contracting in-shell’s for March and April shipments. The macadamia inshell price has increased by ~20% as compared to last year as many buyers were actively covering Australia’s crop in February. The overall crop volume is expected to reach 60,000 metric tons in 2024 as many new trees start bearing. 
• Kenya: Macadamia in-shell price has increased significantly after the lifting of ban by the government. Traders are directly buying in-shells for export to Asian markets causing the local price to increase by 500% against last year farm price. In a recent meeting of traders, processors and growers stated that more than 1,000 metric tons of in-shells had already been traded in January and this volume was expected to increase further. The local processors are facing challenges to buy in-shells for their own processing due to tough competition from in-shell traders. The in-shell price is expected to remain firm as compared to last year as exporters will continue to participate actively in the local market. 
• China: The macadamia market in China is experiencing steady growth due to increasing consumer demand for healthy snacks and ingredients. China has become one of the largest importers of macadamia nuts, driven by factors such as rising disposable incomes, changing dietary preferences, and a growing awareness of the health benefits associated with macadamia consumption. Strong demand from China continues to drive the market leading to an overall price increase of 20-25% across all origins.

Outlook on Pricing: Macadamia prices have been gaining strength over the last few months for both in-shell as well as for Kernels. Strong demand from the U.S., China and EU, plus low carry forward stock will keep the price firm for next two months. We should expect the market to cool down after March as crop flow peaks across all major origins.

Peanuts

United States: 2023 crop national tonnage graded (as of February 20th) is being reported by Federal State as 2,968,126 farmer stock tons. 28,668 tons of this is Seg 2/3 (with 25,824 tons being runners). Furthermore, U.S. demand continues to hold stable in the 3 million ton range. Though the industry had an estimated ~1.016 million ton carry-in from the 2022 crop, 2023 crop production being below 3 million, especially with quality issues, creates a very tightly supplied market. Experts are estimating a possible 2–5% increase in acres for 2024 crop plantings, which is actually needed (especially if there are yield 
issues again) to get the U.S. back to a comfortable supply. 

The U.S. kernel market has been fairly active over the past month with interest in both 2024 and 2025 calendar coverage. Kernel prices for the 2023 crop continues to hold firm in the upper $0.60’s, experiencing upward pressure as inventory gets tighter and tighter. Offers for prompt or nearby positions are extremely limited to not available. Kernel prices for the 2024 crop are in the upper $0.50’s to low $0.60’s, depending on spec, with little trading. Until it is known what shellers will pay for the 2024 crop farmer stock, they will remain hesitant to offer.