It pays to know your nuts.
Grain prices may be in the doldrums, but nut producers are poised
high prices for years.
As long, that is, as they are growing the right type – the so-called
"noble" ones, grown on trees, rather than the ground ones, such as peanuts, for
which prices are shadowing those of other field crops lower.
Peanut prices last month averaged $12.30 a hundredweight in
the US, down 15.8% year on year, on US Department of Agriculture estimates.
However, prices of almonds, hazlenuts, pistachios and walnuts
are up 10% or more.
And, according to Sunny Verghese, chief executive of Olam
International - which sold more than 1.5m tonnes of edible nuts and spices in
the year to June, taking earnings before interest, tax, depreciation and
amortisation (ebitda) of Sing$362m ($290m) – values are poised to remain high.
'Common man's nut'
"Peanuts is a mass nut, common man's nut, it is under price
pressure because of excess production and supply," Mr Verghese said, citing in particular
the US where growers, looking at record corn and soybean yields, have good
production prospects for the nut too.
"We've had a significant growth in crop and therefore
availability and supply."
The US is expecting a 22% jump to 5.07bn pounds in peanut production
Rising almond prices
However, for almonds, the USDA estimate for production of
2.1bn pounds is believed to be heading for a downgrade thanks to a lack of
rainfall in California, which is responsible for some 80% of world production, but
of which 100% is rated by official data as being in drought.
"The subjective estimate of the US Californian crop is is
now estimated at between 1.9bn pounds and 1.95bn pounds," Mr Verghese said.
"That has therefore supported almond prices, so almond
prices are trading at a fairly historical high at this point in time."
For cashews, "we have the same - prices are also
constructive at this point in time, trading in the range of $3.25-3.45 per
pound for the reference grade".
'Nuts on a tear'
Meanwhile, for hazlenuts, Turkey, the top producing country,
is causing a spike in prices, with a late frost, in March, spoiling crop
"As a result, hazelnut prices have gone on a tear," Mr
Verghese said, pegging them at about 21 Turkish lira a kilogramme, up from 11-12
Turkish lira a kilogramme a year ago.
"So it's a massive ride up in prices because of a
significant short crop in Turkey as a result of the frost situation."
He added that pistachio prices "are trading at elevated
levels. Walnuts are trading at elevated levels. Macadamias. So the entire
complex is trading at quite high levels."
And Olam believes that "in the next few years we will see
fairly strong prices because supply response in these commodities are difficult
to bring onstream because of the long gestational nature of these commodities.
"For pistachios, it takes 11, 12 years to get to full
maturity. Walnuts take 10 years to get to full maturity.
"So after you plant, you have to wait for a long time to get
the incremental supply."
In the meantime, you might find high
baklava and marzipan prices baked in.