U.S. (up 0.5% YTD) was down 8.2%
Exports (down 0.1% YTD) were up 5.4%
Western Europe +6.5% (-3% YTD) This region continued to play catch up and were active buyers in recent months.
China/HK/Vietnam +112% (-18% YTD) May shipments from Australia were 11.7 million lbs. vs. 0.6 a year ago. It still appears imports are just shifting and consumption is stable. We hear inventory is very low on the mainland.
India +50% (+14% YTD) Current crop is required to cover their early Diwali needs, especially with the late harvest. This market is very uncovered for new crop. China appears well ahead of them on in-shell purchases.
Middle East / Africa -35% (+7% YTD) Took a breather and worked through inventory. They are gradually coming back into buy additional volume.
The 2019 Objective Crop Estimate is at 2.20 billion pounds still has people in shock, a substantial reduction of 12 percent from the May Subject Estimate and a 3.5% decrease from last year’s crop. The industry experts were Not predicting such a reduction in the crop estimate and all prices have increased significantly. We have seen Stds current crop go from 2.85 FAS up to 3.15 FAS and new crop October from $2.55 per lbs. FAS up to $3.05 per lbs. FAS. Nonpareil Inshell new crop went from $2.10 FAS September up to 2.30 FAS. Nonpareil Extra #1 23/25 AOL September went from $3.00 FAS to $3.40 per lbs. FAS.
The weather remains favourable for 2019 crop development. Harvest timing still looks late as Nonpareil are just beginning hull split.
With a trend toward tighter plantings and smaller trees, the nut set per tree has been in a long-term decline, but much of the cause of low sets in recent years was due to poor weather as well (drought, frost, etc.). This further decline of 18%, down to 4,667 nuts per tree, was a big surprise. While the average kernel size is the same for all varieties combined, Nonpareil are expected to be the smallest since 2015.
All prices have risen significantly in light of the smaller than expected crop estimate. Many key growers are stating their orchards due look lighter than initially expected. The outside rows of the orchards look good to the eye, however, when you walk into the orchard, they feel the crop is much lighter inside and not as heavy as the outsides of the orchards. The new crop harvest is expected to be 5-7 days later than normal up and down the valley, thus making a significant premium on early new crop shipments.
- Shipments were right in-line with industry expectations. Shipments were 165.2 million lbs. vs. 156.8 million lbs. in 2018 – an increase of 5.4%
- June sales of 86 million lbs. are down from 104 last June, as prices increased and not much product remains.
- Committed/Unshipped are 283 million lbs. vs. 239 a year ago, up 18%
- Committed/Shipped reached 2.93 Billion lbs., approximately 93% of total supply compared with 90% a year ago.
- Uncommitted inventory is 189 million lbs. vs. 265 million lbs., down 29%.
- New (2019) crop sales are 231 million lbs. vs. 156 million lbs. at the same time a year ago, up 48%
- Carry Out for July 31: Based on the strong commitments, we expect around 310 million lbs.
- Current crop inventory is almost gone. If buyers have needs for July/August, it’s recommended to cover as soon as possible.
- 2019 Crop Supply Scenarios: A 2.20 billion lb. gross crop (like the objective estimates) with 310 carry-in would result in a decrease in total supply of 116 million lbs. This would require a significant decline in shipments that we have rarely seen, just in very high priced seasons like 2005 and 2014. A crop of 2.5 billion lbs. (like the subjective) would result in an increase in supply of 178 million lbs., allowing for consumption growth and potentially a smoother carryout. The latest consensus seems to expect a crop in between these figures (2.2 to 2.5) and thus many think we are priced accordingly. Crop receipts will be watched carefully to guide price direction, however, we likely will not have a good idea until 4 to 6 months from now. We anticipate crop receipts highly varied by region, variety, etc. so we expect to hear all kinds of yield reports as harvest gets underway.