The Almond Price Crash Worrying California
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The hit comes at a time California is preparing for its largest almond harvest ever.
U.S. almond farmers are braced for more fallout from global trade tensions, although they appear better placed to withstand any escalation than their soy-producing peers.
The price of almonds has fallen 14 percent from this year’s high in March after the U.S. crop was targeted by leading importers China and Turkey as retaliation against Washington’s steel and aluminum import duties. Also firing back against the metal levies is India — the top buyer of the U.S. nut — which is set to impose additional tariffs in early August. As growers in California, which produces all of the U.S. supplies, prepare to harvest this year’s record crop, they are facing a drop in demand.
“Typically at this time of year there is a lot of activity with major export destinations booking a certain amount of their requirements, but this year there’s been an abundance of caution,” says Richard Waycott, CEO of the Almond Board of California.
The uncertainty itself is doing more harm to confidence than any potential duty.
Giles Hacking, managing director, CG Hacking
Adding to U.S. almond producers’ woes are European Union plans. Brussels is putting together a list of retaliatory tariffs on U.S. products, which farmers fear could include almonds if Washington goes ahead with punitive import duties on EU cars.
“The uncertainty itself is doing more harm to confidence than any potential duty,” says Giles Hacking, managing director of nut traders CG Hacking.
The impact from the trade wars comes as growers in California are preparing for their largest harvest ever. Production is forecast to total more than 1 million tonnes, according to the latest estimates from the U.S. Department of Agriculture.
But almond prices have so far escaped the sharp drop in soybeans, which recently hit a nine-year low. Analysts say this may be because unlike soybeans, which are grown and exported by several big producers including Brazil, the U.S. and Argentina, the U.S. dominates the global almond market, accounting for just under 80 percent of production and about 70 percent of the export market.
Buyers, then, have fewer options if they need almonds. “The question is whether people can get almonds from elsewhere,” says Jara Zicha, an analyst at commodities data group Mintec.
Chinese importers are already hunting for alternative sources. One nut trader says Chinese buyers were buying Australian almonds, which are free from import duties. In May alone, Australian exports to China jumped 17 times from the previous year to 282 tonnes, according to the Almond Board of Australia.
Spanish processors, which are the second-largest buyers of U.S. almonds, are also being approached by Chinese clients.
Still, the big fear for U.S. farmers is that Chinese buyers will simply shun almonds altogether. Once the Chinese source what they can from Australia and other countries, says Waycott, “the real risk for us is that importers and consumers just choose a different nut that comes from a non-U.S. origin.”
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