Almond prices are set to stay firm, Select Harvests said, as the Australian-based producer of the nut revealed a rise in the value it has achieved for its crop, with yields beating previous expectations too.
“Increased global demand for almonds,” at a time when weather upsets have left the important California crop looking well short of initial forecasts, “has seen the market price for almonds remain firm,” Melbourne-based Select Harvests said.
For Australian exporters, values have also found support in local terms from weakness in the country’s currency, and demand from China, “a relatively new market for Australian almonds”, which has “grown significantly”.
US exports of almonds, as of many other agricultural goods, to China have been undermined by retaliatory tariffs imposed by Beijing.
Select Harvests said that “we anticipate this [firm pricing] to remain constant, unless there is a significant change in the US supply outlook”.
The US Department of Agriculture early last month shocked the almond market by estimating the California crop 12.0% below an initial forecast, taking it 3.5% below the 2018 result.
The 2019 US almond crop “experienced unusual weather”, the USDA said, noting “significant rainfall” during flowering, while strong winds “were reported to have damaged trees and knocked off some nuts”.
According to broker Bell Potter, almonds are now leaving Australian ports at Aus$9.40 per kilogramme, with US shipments prices at the equivalent of about Aus$9.10 per kilogramme.
By comparison, Select Harvests said in May it was assuming an average almond price of Aus$8.50 per kilogramme for its 2019 crop, with 80% of its then forecast harvest sold, although this had now risen to Aus$8.60-8.70 per kilogramme.
The group too raised its estimate for its latest harvest, to 22,200-22,500 tonnes, from a previous figure of 20,750 tonnes – an upgrade it attributed to improved growing techniques, including “further investment in risk-mitigating frost fans”, and to increased processing efficiency.
The raised output, “in addition to the strength in the global almond market, will lead to Select Harvests delivering a healthy financial result” for its 2019 fiscal year, which ends next month, said Paul Thompson, the group’s managing director.
He added that “looking forward to the 2020 crop, at this stage the trees are in good health and additional frost protection has been put in place”.
Tree are currently flowering, with bees in place “for the next few weeks” to ensure pollination.
The announcement prompted a 10.0% surge in Select Harvests shares to close at Aus$7.81 in Sydney, their best finish since July 2016.
Broker Bell Potter, restating a “buy” rating on the stock, raised its target price for the shares to Aus$8.70 from Aus$8.35, noting Select Harvests’ “positive” crop update.
“In the near term we see Californian supply issues and a lower Australian dollar supporting higher realised almond prices,” Bell Potter analyst Jonathan Snape added.