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Are almond producers set for a fifth season of losses?

Prices for US almonds have been in decline since the end of February 2024 as positive bloom conditions and the first set of industry estimates have pointed towards a crop size of close to or above 3 billion pounds. Market participants are expecting total availability to come in at similar levels to the 2021/22 season at 3.50 billion pounds.

This has weighed on prices for both current and new crop, with new crop pricing sitting at a 5-10 cent/lb discount to current crop, depending on the item.

Prices for current crop slid to seventh month lows this week with the Mintec Benchmark Prices for standard 5% almonds FAS US [Mintec Code: NAL1] assessed at $1.58/lb on 2 May 2024; shedding 2 cents/lb on the week and lowest price for the benchmark since 12th October 2023.

"We are heading into the fifth year of losses unless something major changes. We lose money on every container of almonds that gets sold. This isn't sustainable, and I'm expecting people to start winding down their almond operations or to go bust imminently. We can't keep doing this forever," a US grower & exporter said to Mintec.

The industry is waiting for the next set of production estimates to confirm current sentiment. These estimates are due out imminently, with the Wonderful estimate expected during the week of 6th May and the USDA Subjective Almond Forecast due for release of 10th May.

The continual issue for US almond producers is the acreage of almond orchards, which has seen rapid growth since the 2000s. The many years of good returns for the crop incentivized a continual area expansion which has led to a mismatch between supply and demand since the 202/21 season.

"Yields aside, there are simply too many trees in the ground. Anytime we have a good or normal year, there are more almonds than people know what to do with," a US almond trader stated.

The bearing acreage is expected to see a marginal drop this season for the first time since 1995 (read more here), but significantly more orchards will be needed to be pulled to reduce supply enough to return the industry to profitability.

At the same time investment in infrastructure has suffered over the past several years with handlers and growers unable to justify increasing expenditure while they have lost money.

"We still have close to the same amount of storage as we did prior to production hitting 3 billion pounds. This means that we have had to move stocks as quickly as possible to free up space and bins when harvest looks good," a US handler said to Mintec.

Similarly, a repeated conversation with growers that Mintec has had is the inability to follow best practice in input applications and orchard removal due to a lack of cashflow.

"We are having to focus inputs on our most productive orchards. The others have had less crop protection and fertilizers applied to them. We simply can't afford to farm the way we'd like to. I'm still paying off chemical bills from two seasons prior and the banks aren't willing to extend lines of credit," a US grower stated.

Until the structural issues which are facing the almond industry are resolved market participants expect prices to remain subdued relative to the cost of production. Many are pointing towards bankruptcies as the main may in which the acreage may swing back into balance in the coming seasons.


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