Almond growers, marketers prepare for big 2010 crop

Issue Date: July 14, 2010

By Christine Souza
Assistant Editor

Scott Phippen, owner of Travaille & Phippen, an almond grower, packer and shipper in Manteca, checks almonds being prepared for export. Phippen is installing equipment to process in-shell almonds for sale to China and India.

Faced with what is predicted to be another record-breaking crop of 1.65 billion pounds this year, the Almond Board of California says it remains confident that it can continue to grow demand for almonds worldwide.

Following last Thursday’s announcement of the 2010 almond production forecast by the U.S. Department of Agriculture National Agricultural Statistics Service, ABC President and CEO Richard Waycott expressed confidence that the California almond sector will continue to produce high-quality almonds that meet the growing global demand.

“As the objective estimate is higher than last year’s crop, the efforts of the almond board to further develop global markets by expanding the demand for California almonds will continue,” he said.

Basing its prediction on almonds to be produced from 740,000 bearing acres, government forecasters raised their crop projection 8 percent from the subjective forecast issued in May. If realized, this year’s projected crop would be up 17 percent from last year.

Almonds move along a conveyor belt at Travaille & Phippen in Manteca prior to shipment. Almond grower-shipper Scott Phippen, second from right, observes the process as almonds are prepared for export.

Kelly Burkholder, marketing manager for Harris Woolf Almonds, an almond grower, packer and shipper on the west side of the San Joaquin Valley, said the almond production forecast announcement can be “a market changer.”

“Almond production above 1.6 billion pounds will put downward pressure on prices; a number under 1.5 billion pounds would support prices, and something in a 1.5-to-1.55 billion pound range would be market-neutral,” Burkholder said. “We expect a good crop and we expect demand to be stable and prices to remain hopefully at profitable levels…better levels than last year.”

Compared to the 2009-10 crop year, things seem to be looking up. Last year, growers faced short water supplies, low prices for almonds and a huge carryout of 425 million pounds from 2008, about one-third of the state’s almond supply, Burkholder said.

He said he expects the carryout from 2009 to be 100 million pounds less than what it was last year, which better positions the state’s almond sector.

Almond grower, packer, shipper Scott Phippen, owner of Travaille and Phippen Inc. in Manteca, noted that last fall, almonds sold for rock-bottom prices of between $1.10-$1.20 a pound. Just a few months later during the first quarter of 2010, the price for almonds doubled to $2.20-2.30 a pound.

“What happened is we thought we were going to ship just incredible amounts of almonds and suck up the huge carryout of the 2008 crop. Things were really going well and all of a sudden the brakes came on,” Phippen said. “After January, the lights in the market pretty much went out and we were having a hard time moving anything. Basically, anytime someone would call for an inquiry to purchase almonds the reply was, ‘We can buy it out of the secondhand market cheaper.’ So we were losing the business to the almonds that we had already sold to China. They were re-entering the market.”

In 2009, China achieved the top spot as the No. 1 export destination for California almonds with shipments of 124 million pounds, while at the same time, Burkholder said, the country was also “a significant reseller of some of that product.”

“What we don’t like about it is we may end up competing against our own product in another market that we didn’t expect,” Burkholder said. “Most of the volume that gets sold to China goes through Hong Kong traders. We have seen some of those traders reselling product in the European market, so all of a sudden you are competing against your own product.”

Almond handlers acknowledge that the Chinese traders are taking advantage of the first rule of business, which is to buy low and sell high, but in some cases when they make mistakes, they force California almond handlers to repair the damage.

“They will make mistakes. All of a sudden they have paid too much and the market has gone down on them. So you start having defaults in the marketplace, which we are experiencing right now,” Phippen said.

Since shipments to China have slowed in the last few months, Burkholder said, Spain has taken back its title as the No. 1 export destination for California almonds, although shipping volumes to the two countries remain close.

China has also become a top export destination for California walnuts.

“China continues to make heavy purchases of California walnuts,” said Modesto walnut grower Paul Wenger, president of the California Farm Bureau Federation. “The dollar has strengthened some in recent weeks, but is still lower than a few years ago. That makes California walnuts more affordable and foreign buyers are able to purchase walnuts at a lower price in their currency. The foreign buyers also like California walnuts because of the high quality.”

The walnut carryover from 2009, Wenger said, is at an all-time low and foreign and domestic demand for walnuts remains strong, all of which bodes well for strong prices this year. Government estimates indicate California growers could produce 415,000 tons of walnuts this year, down about 21,000 tons from 2009.

Regarding pistachios, California is the world’s second-largest producer, says Richard Matoian, executive director of the Fresno-based Western Pistachio Association.

“Demand is strong worldwide,” Matoian said. “Export demand is even stronger than domestic, which is aided by the weaker dollar and the recognition by foreign buyers of the quality of the California product. Demand has also increased because of the health benefits of pistachios.”

For 2010, Matoian said, growers expect to produce a smaller crop of 350 million pounds of pistachios, down slightly from last year’s figure of 355 million pounds because this is an “off” year for alternate-bearing pistachio trees.

Global customers are now putting in orders for California nut crops so that they will arrive in time for the holiday season. Marketers of California almonds realize that with the low price for almonds compared to other nuts, theirs may be a highly sought after product.

“Today, almonds are far cheaper than any other tree nut. Pistachios, walnuts, pecans are all much higher than almonds, so almonds would provide a better margin,” Burkholder said. “I was just on the phone with a domestic customer and they are seeing their almond consumption increase because almonds are so competitive. They expect that they’ll see some changes in their recipes for mixed nuts.”

(Christine Souza is an assistant editor of Ag Alert. She may be contacted at csouza@cfbf.com. Reporter Ron Miller contributed to this story.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item. Top