The “perfect storm” that led to several years of unprofitable returns for California almond growers may have subsided, but time will tell how quickly the industry recovers. One leading bank thinks it could be sooner rather than later.

Rabobank’s RaboResearch Food & Agribusiness division suggests an optimistic outlook for almond and pistachio farmers. Walnut farmers could likewise see a positive trend, though that U.S. industry has much further to go to climb from the pit dug by global competition from China and Chile.

California almond farmers began printing their financial ledgers with red ink in 2020 when the global COVID pandemic caused a worldwide economic downturn. Later that year almond farmers harvested their largest crop ever at just over three billion pounds, putting a glut of almonds on the market.

For the next three seasons, the U.S. almond industry carried forward from 600 million to over 800 million pounds of unsold nuts, adding that to new crops that ranged from 2.5 billion to over 2.8 billion pounds.

The record almond crop in 2020 came ahead of industry expectations as the USDA apparently misjudged the number of bearing acres that year, Fumasi said.

“We’re coming out of that tunnel now,” he said, noting that the economic pressures of inflation and the strong U.S. dollar compared to other world currencies could subside later this year.

Related:USDA forecasts larger almond crop

Global demand for U.S. almonds appears to be recovering. Shipments of U.S. almonds in May were up over 15% compared to the same month last year, and are up over 5% year-to-date, according to the Almond Board of California.

Of the 3.1 billion pounds of marketable U.S. almonds, the almond board’s May position report shows that over 2.3 billion pounds of nuts have been shipped to global markets in the current marketing year.

Grower prices are firming as a result. A field representative for an almond processor in central California said the price of Butte/Padre nuts, a common nut used by candy manufacturers, is up about 40 cents per pound from where it has been. Inshell and standard Nonpareil almonds, the large snack nut size almonds, have rebounded to about $2 per pound.

The same field representative credits this price hike with the dwindling supply of almonds remaining ahead of the upcoming harvest. The California almond industry expects the unsold volume of almonds to be under 500 million pounds this year, a significant decrease in its unsold carryout that was seen over the past three years.

“What’s left of the carryout is not the high end product,” Fumasi said. “This has led to a firming of prices for the remaining crop.”

Related:Bearing almond acreage drops slightly

Even so, Fumasi says the industry is facing the task of selling about 3.4 billion pounds of almonds in the coming marketing year when adding the current marketing year’s likely unsold volume to the estimated three-billion-pound crop slated for harvest in early August.

According to an update from RPAC Almonds, a California processor in Los Banos, domestic shipments of U.S. almonds were bolstered earlier this year by a reduced retail prices charged by Trader Joe’s and a significant increase in the retail price charged for cashews. These nuts tend to compete in the domestic marketplace, according to RPAC.

Pistachios

Perhaps the bigger news is how pistachio growers are benefitting from significant domestic demand, Fumasi said. The ten-year average increase in domestic consumption of U.S. pistachios is 10.7%, according to Rabobank. Indian consumption increases averaged 12.7%, with Egypt consuming 24.6% more pistachios each year.

Still, Fumasi says the average increase of U.S. pistachio exports trails Turkey. The average increase of U.S. nuts destined for foreign markets is just over 8%, with Turkish exports increases exceeding 26%.

“Their major increase in U.S. production made everybody a little nervous,” Fumasi said of the pistachio industry’s first-ever billion-pound crop last year. “Since then, the industry has done a tremendous job of moving those nuts.”

Meridian Growers reports in its monthly newsletter that there was a decrease in May shipments when compared to the same month last year. Still, they cite industry numbers that reveal year-to-date shipments at 42% higher than last year’s number. Meridian says the reduced shipments for May are due to shrinking inventory as “sellers look to hold onto 2023 stocks to cover their needs in 2024.”

Domestic shipments of U.S. pistachios are up from last year, which Meridian Growers says bodes well for an industry that saw sluggish demand the past few years.

Rabobank expects the unsold volume of pistachios, or carry-out, at the end of the marketing year to be somewhere between 100 million and 150 million pounds, down from last season’s 163.8 million pounds. The pistachio industry’s marketing year runs from September 1 through August 31.

Rabobank believes the average pistachio price to U.S. farmers could weaken as more nuts come on the market, though the wide price swings, as was seen from about 2012 through 2018 could stabilize.

Anecdotal reports suggest that the California walnuts being removed are being replaced by pistachios, which concerns some as foreshadowing a potential oversupply. The United States currently produces over half the world’s pistachios. Iran and Turkey remain major global competitors to the U.S. industry.

Walnuts

Export competition from China and Chile continues to depress the U.S. walnut industry, Fumasi added. Grower prices that peaked 10 years ago at over $1.80 per pound fell to about 20 cents last year as the 10-year average production increases for China are up almost 6%, and up 14% in Chile.

Fumasi says global walnut consumption is up, but those nuts are not coming from the United States. China’s 10-year average increase in exports is just over 30% annually, with Chilean exports increasing, on average, of 14.3% per year. The U.S. 10-year average is 4.6%.

Though the price paid to U.S. walnut farmers is expected to increase somewhat, all other figures, including consumption and exports continues to decline.