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Almond prices remain high, despite raised US crop hopes

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Almond prices remain buoyant despite output in California, the top grower, likely having risen after all this year, Australia’s Select Harvests said, unveiling results which spurred a strong rebound in its shares.

 

The Victoria-based group, which produces more than 20% of Australia’s almonds, said that an official forecast in July for a Californian crop of 2.20bn pounds was now being viewed as an underestimate.

 

“Industry [is] forecasting 2.3bn-2.4bn pounds,” Select Harvests said, a number which would represent an improvement on last year’s 2.28bn-pound result, and indeed mark a record high.

 

“To this point in time, the receipts from the US, which will basically all be in by December, were 1.6bn pounds compared to 1.55bn last year,” said Paul Thompson, the group’s chief executive.

 

‘Selling through at a rapid rate’

Nonetheless, the rapid extent of sales signalled buoyant demand too, with Californian shipments in the first three months of 2019-20, which began in August, up 6.9% year on year at 609.5m pounds.

 

“And we can also see a very positive outlook with commitments [ie crop sold but not delivered] up 18% on last year,” at 694.0bn pounds, Mr Thompson noted.

 

“So the US crop is selling through at a rapid rate.

 

“And if the crop does turn out to be 2.2bn pounds, there’s going to have to be a slowdown there, which generally means improved pricing,” given the need to ration demand.

 

Higher prices

The group reported almond kernel prices in Australian dollar terms at their highest on data going back three years, gaining a premium to Californian walnuts and, more unusually, approaching the value of cashew nuts, as sourced from Vietnam.

 

Values had continued to improve on the Aus$8.60 per kilogramme Select Harvests had achieved for its 2019 crop, now 85% sold or committed, in turn a rise from the Aus$8.05 per kilogramme realised last season.

 

Australia’s own shipments for 2019-20, as started in March in the country, had as of September reached 62,445 tonnes - up 33% year on year, and in seven months having already overhauled the total of 60,894 reached last season.

 

China has represented a particular growth market, accounting for 35,659 tonnes of this season’s total – up from 6,061 tonnes in the same period of 2018-19, a surge reflecting China’s tariffs on imports from the US.

 

Rising profits

The comments came as Select Harvests unveiled earnings of Aus$53.02m for the year to the end of September, compared with Aus$20.37m for the group’s 2018 financial year, which actually ended in June 2018.

 

Revenues for the year to September 2019 totalled Aus$298.5m, up from Aus$210.3m for the year to June 2018.

 

Besides the improved almond prices, performance was also helped by a harvest which, at 22,690 tonnes, soared 45% year on year, and was a little ahead of the 22,200-22,500 tonnes that the group had previously guided too.

 

The improvement reflected “excellent growing and harvest conditions, increased production from our maturing orchard portfolio and the benefits from our investment in risk mitigation such as frost fans”, Mr Thompson said.

 

One headwind was that the Australian dryness which has proved beneficial overall to production of almonds has also raised the costs of irrigation needed at some points in the growing season.

 

Select Harvests shares closed up 6.9% at Aus$7.74 in Sydney, having touched Aus$8.10 earlier, matching a four-year high.

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