Nuts Market & Crop Update - Global

Almonds

The “April Position Report” was brought to us on Tuesday, May 14th. It was the second strongest shipping month of the current 2023/2024 crop year and with just three months left until the new crop, expectations are for continued strong shipments putting pressure on remaining supply. Shipments in May look to be strong, and the industry continues to see strong sales despite some additional tightening in the supply of several varieties and sizes. This has not discouraged buyers who have been flexible in understanding the overall picture of current supply for this time of the season. The weather in May has been a mixed bag with a strong rainstorm earlier in the month and cool weather. This has, of course, led to plenty of water for irrigating the orchards. Up to now, the average temperature for this time of the year has been about 13 degrees cooler. With the official start of the summer behind us, temperatures are now rising to the high 80’s and 90’s the past couple weeks. Having driven through Bakersfield recently on the I-5, the almond orchards along the way look as beautiful as they ever have been and are heavy with almonds. 

The USDA/NASS has released the subjective estimate of 3.00 billion pounds, representing an increase of over 21% - greater than last year’s production of 2.45 to 2.47 billion pounds (once the final receipts are in). The industry will now focus on the remaining current crop and begin marketing the new crop based on the current estimate. Unless there is a big surprise with the objective estimate due out in less than 6 weeks, this will continue to be the marketing basis for the time being. With April shipments at 241.48 million pounds up 22.4% from last year, shipments continue to be stronger than anticipated, putting pressure on this year’s crop and minimizing the carry-out this year to a 450 million pound estimate. Crop receipts have also topped out, currently at the 2.44 billion pound mark, and should rise only by a few million more pounds in the months ahead. 

The industry has now shipped 2.08 billion pounds and stands ahead of last year’s shipments by +4.24% year-to-date. Domestic shipments were 64.81 million pounds, up 14.1% versus last year’s 56.82 million pounds. This was the strongest shipment month yet for the domestic market this season. For the export market, shipments couldn’t have been much better with 176.7 million pounds, up 25.8% over last year’s 140.44 million pounds. The export market remains the driving force, which is up 5.6% over last year’s shipments while the domestic market is flat to last year, up only 0.60% to a year ago. 

The remaining inventory will create a tight transition as there is not much left out there of usable material at this point. Anything left unsold at this point is most likely lower grades such as Standards, Natural Whole & Broken, etc. 

Cashews

In-shells:

• Another month has passed with further confirmation of a short crop. The earlier-than-expected crop short-fall after multiple years has created negative impact on the supply side.
• Crop arrivals in the Ivory Coast represents around 50% of the total Africa supply, which didn’t improve during May. This resulted in the local government stopping all in-shell trading activities to support local processors to cover the crop. It remains unclear as to when the export ban will be lifted at this current time.
• Local crops in Vietnam are reported to be over, being either already processed (against the in-shell delays from Africa) or being used for their nearby commitments. Local processors filled any remaining gaps with the higher-priced Cambodia in-shells.

Kernels:

• Kernels were trading during the last three seasons at disparity, hence a significant correction basis with today’s in-shell prices is not a surprise. Still, margins for Asian processors remain very thin, so corrections may continue once we move further into the season.
• The majority of the kernel processors are challenged to execute their existing contracts, which are at the lower side of the spectrum and will need to start either canceling or requesting to postpone commitments into far forward months. Destination markets have been running tight inventory in the last year due to high interest costs and not having the clarity on where the market was directed. Many were expecting the second flush to potentially catch up on earlier short arrivals, which in the end, didn’t materialize.
• Kernel prices corrected very sharply during the month and moved up quickly to levels closer to parity with in-shell pricing. It remains to be seen how destination markets will react to these levels as today’s pricing is significantly apart from where commitments to end customers were made. Therefore, it’s most likely that destination markets will be the key drivers to determine where prices will develop in the coming months.

Hazelnuts

Supply side:

• The prices have come off the peaks of $8,50/kg in March, now to around $7,30/kg. We expect a further correction as demand remains weak and adequate supply to cover the demand. However, the downside remains limited, as the TMO is expected to announce its new season price by July, which can support the market.
• The current season is now nearing its close. Turkey is still carrying significant stocks, around 200,000. The TMO has offered its previous season crop at 124 TL/kg, but has no takers.
• Ferrero has finished sourcing its season requirement. Without any large buyers, we thus have seen correction over the past few weeks.
• The exporter’s association has announced a subjective crop estimate of 805,000 for the 2023/2024 crop. The INC has been a bit conservative at 785,000 metric tons. Overall, the weather has been generally conducive and crop development looks good.

Demand side:

• We continue seeing most buyers prefer to cover only their immediate requirements.
• Most buyers have covered their Q3 demand and as prices come off, some buyers are now actively looking to source their Q4 requirements as well.
• Turkish exports for the season as of the end of January stand at 222,000 against 225,000 for the same period last year. Exports have caught up as Ferrero was able to source and export their requirement late in the season. We expect demand fundamentals to be tight with inflation woes and other ingredient prices like cocoa being very high.

Outlook on pricing: Prices have slowly cooled off from its peak owing to good supply and weak demand. We expect more correction, but the downside will be limited as buyers are slowly looking to cover their Q4 requirements, and farmers expect the TMO to increase the price for the coming crop. The 2023/2024 crop news has been encouraging as supply seems more than adequate for the coming season.

Pistachios

Pistachio crop receipts remain unchanged at 1.49 billion pounds, a 69% increase from last year's crop of 884.1 million pounds. Shrinkage and other adjustments were corrected in April, which added 73.4 million pounds to the crop inventory position from March. 

Unlike strong shipments seen in previous months, April shipments slowed down to 79 million pounds, which is just a 9% year-over-year increase. This slowdown is primarily from exports, which reduced to 58 million pounds in April, recording a 35% drop from March.

Despite the slowdown in April, total year-to-date shipments stand at 903.7 million pounds, which is a 50% increase compared to last year. This is driven by exports to the EU market, which are up by 76% year-over-year and an increase of 140% to the China market. Weak momentum in domestic shipments continues with a sluggish increase of only 4% year-over-year. Only 31% of the inventory is available for shipments from origin. Pricing is expected to remain firm, given the low inventory availability. Early estimates of the new crop have come out in the range of ~1 to 1.3 billion pounds. 

Macadamias

Key developments in major macadamia growing regions:

• Kenya: Kernel offers remain low as processors are working on covering in-shells before making new offers for the coming season. China has been aggressive in covering NIS from Kenya this season, hence a reasonable volume of in-shells are already contracted.
• South Africa: Despite a 2-3 week delay in harvesting compared to last year, growers remain optimistic about this year’s projected crop of 90,000 metric tons. China has increased its in-shell contracts with big and medium growers, leading to a recent surge in in-shell prices. Medium-scale processors are holding off on forward contracts until they secure sufficient NIS, resulting in lower kernel offers in the short term.
• Australia: Heavy rainfall in early April caused delays in harvesting in the growing areas. The crop is still forecasted at 56,000 metric tons, surpassing last year’s 48,400 metric tons. NIS offers are low at the moment as most of the in-shell volumes have been contracted.

Outlook on pricing: Macadamia prices remained flat over the last few weeks for both in-shell and kernels. Demand from the US, China, and EU looks good and hence prices look to be in the range of +/- $0.15-$0.20 cents for nearby positions. 

Peanuts

United States: Not much has changed from last month’s report. The 2023 crop has had quality issues and the carry-out is short, which could make for a tight transition to the 2024 crop in the fall. 2024 crop plantings are halfway complete and on track with the 5-year average. Plantings should be about complete in the next 2-3 weeks, weather permitting. For the summer and fall (growing season and harvest), we will be watching the weather as El Nino is weakening significantly, and it is predicted that conditions will shift to neutral over the next month, then quickly to La Nina sometime this summer, which could cause higher temperatures this summer. Experts are also calling for potential record-breaking activity this hurricane season (June - November).

Tropical activity is good to bring necessary rains to the majority of the regions during the growing season, but bad if storms stay in the Atlantic, drying out the growing regions, especially if temperatures are above average (as in 2019 when we had the worst aflatoxin crop on record). Too much activity in the fall during harvest can prevent growers from getting their crops out of the fields on time. Weather is the biggest question mark right now.

Demand for U.S. peanuts continues to hold stable in the 3 million ton range, in part due to increased exports. It remains to be seen whether this increased export demand holds as much of the influx was due to Argentina’s poor crop in 2023. Though USDA predicted acres in March to be up only about .05% from last year, most believe the increase will be at least 5%-8%, possibly higher. A production increase of about 5% is needed to get the U.S. back to a comfortable supply, so a slight increase in acres is necessary (especially if there are yield issues again). The certified acres report comes out at the end of June, which will give us a much clearer picture of the actual acres planted. Still, we will have to wait to find out about quality and yields (production size). 

Activity in the U.S. kernel market still remains alive, with interest in both 2024 and 2025 calendar coverage. Kernel prices for the 2023 crop are holding 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 remain in the upper $0.50’s.