The market remains fairly inactive overall, both for American and Spanish almonds. Supply remains very low and demand is modest.
With regard to American almonds, the supply, which is very limited, is around $2.75/lb for the 5% standard (around €5.50/kg). The highest prices for Non Pareil are around $3.10/3.15/lb. All products fall between these two prices.
The Non Pareil variety has been harvested for several days now, as it is the first to be harvested. Not long ago, it was estimated that the yield would be higher than last year's harvest (24), but we are now surprised to find that it appears to be lower (there is talk of a 7-10% decrease compared to last year's harvest (24)). It is estimated that this shortfall will be offset by other varieties that will be harvested later to reach a final result of between 2.70/2.80 Blbs of final harvest (similar to last year's harvest 24), but far from the 3 Blbs official estimate given on 12 July. This is the information we are receiving from California.
This is the reason for the low supply at present, as this surprise has caused sellers to hold back. On the other hand, since it is assumed, as we have mentioned, that the harvest will be more similar to the last 24 than to the estimated 3 Blbs, prices have practically returned to pre-estimate levels.
Demand, meanwhile, is responding discreetly to this situation. There is no buying pressure whatsoever. Prices have been rising on the supply side, not because demand has followed suit with transactions. This is important to bear in mind. It may be because it is the holiday season, or because buyers stocked up at lower prices during the sharp drop that followed the estimate and the following two to three weeks when everything picked up strongly... Whatever the reason, since the beginning of August, demand has remained fairly low, especially once the price exceeded levels of $2.45/2.50/lb in the 5% standard.
Now we are entering September. The holiday period will be over in Europe and all the players will be back on the pitch. The offer proposes the situation mentioned above. We will see what happens with demand, as nothing has been said yet. Whether or not this situation continues will depend on several factors.
If the American seller switches to other varieties and compensates for the loss recorded in Non Pareil and even finds that the harvest is very good in those varieties, the price could stabilise or even fall. If, on the contrary, the opposite occurs, and the loss is not offset but rather exacerbated, this could lead to an even more bullish market. We will not know this until the second half of September or early October, which is when they are harvested.
The demand, for its part, will depend on what happens from September onwards. The large purchases made in those weeks before the estimate, most of them, were made so that deliveries would arrive from the end of September or early October. Shipments to Europe in May and June were low. Those in July (especially in the second half of the month after the estimate) were high (these will not reach buyers until after the end of September, depending on when they were shipped) and those in August will probably be even higher than those in July, apparently. This means that what arrives in Europe now and until the end of September will be at higher prices than we are seeing now, and in lower volumes. The bulk will arrive from the end of September onwards at lower prices than we are seeing now. It is important to bear this in mind in order to make an accurate analysis of demand. Therefore, the question of September remains.
The offer is expected to remain firm in the market over the coming weeks. The state of the harvest needs to be assessed. Demand, which appeared to be high not so long ago, but we do not know how it will be covered during those weeks mentioned with many transactions, remains to be seen in September, which will be one way, and then from October onwards, which will probably be another.
As we have said, we still need demand to position itself; we already have a clear idea of supply.
In the midst of all this, we have Spanish almonds. Looking back, we must remember that during those weeks of heavy trading we mentioned, Spain, due to the situation it was in with its 24 harvest selling well, did not want to enter the market to sell. The American market fell sharply, but the Spanish market fell gradually until it caught up with the American rise. Something was done, but nowhere near the volume of transactions that took place with the American market.
Spain also has several factors to consider. On the one hand, as in California, it seems that the harvest will not be as expected. There are several growing areas where yields are lower than expected and we will have less quantity. This, together with the increase in the United States, means that the supply of almonds in shell is low and prices are high, often not in line with the grain. This causes a bottleneck. Lack of supply. Rising prices. Which is what we currently have.
It should be remembered once again, as in California, that rising prices are not supported by demand in the form of transactions. Demand remains on the sidelines and it is supply that rises on its own.
Spanish almonds will probably face two scenarios. One in September, as we have mentioned, with American almonds arriving at a higher price than today and in limited quantities, and the other from October onwards, when large quantities of American almonds will arrive at lower prices than today.
In this situation, it is reasonable to assume, if demand allows, that the current stability will continue over the coming weeks... but what will happen when October arrives?
As with the American market, demand must now make the next move. Clearly, this is a typical supply/demand tug-of-war. The question will probably be settled by who needs to act first: the seller to sell or the buyer to buy... We shall see!
The prices currently being quoted, or at least the latest ones heard, have been €5.50/kg for communal landowners and €5.80/kg for single-variety s/14, which would leave a 12/14 single-variety at around €5.65/5.70/kg. This is the latest information available or being discussed.
With regard to organic almonds, they have not been affected too much by everything mentioned above regarding conventional almonds. It is true that before the decline, prices were higher, at €7.10/7.20/kg, and now they are around €6.70/kg, but this may be due to the nature of the market itself, something specific to organic products, rather than conventional ones. We have observed for some time that demand is low, as is supply. And this continues to be the case today.
Returning to conventional almonds, we have already seen in previous years what happens with Spanish prices. Activity is inversely proportional to how far we move away from American prices. When the spread increases significantly, i.e. we become much more expensive, activity declines. When we become cheaper, activity increases. As every year, this will depend on the volume we want to produce.
The months leading up to Christmas are traditionally the busiest. Although with the harvest volumes we handle, we already have almonds for the whole year, the peak season is now. We will see how we manage it.
Below are some graphs showing price trends.
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