Rising concerns about a glut in the almond market were confirmed by the Wall Street Journal in “U.S. Farmers are Reeling from Chinese Tariffs.” The article cites the Almond Board of California, and says the board is expecting a record crop when the harvesting of some varieties begins in about two weeks.
Coupled with the supply increase is the throttling back of demand in China because of steep tariffs, triggering a 10 percent decrease in almond prices.
Chinese businesses are buying more nuts from Australia and Africa, as well as more homegrown almonds. Additionally, China has closed a trading loophole through which American almonds were transshipped through Vietnam.
US almond exports to China in June were about half the amount in the same month a year earlier. Pre-sold almonds for the upcoming season starting August 1 were 156 million pounds. Last year’s pre-sales were double that.
China had been the second biggest importer of almonds after the European Union in years past.
China’s current tariffs add 50 percent to a consumer’s price. Export prices dropped from $2.76 to $2.46 in the past two months.
While Chinese demand actually rose earlier this year, the imposition of tariffs has softened demand, according to the WSJ article. Newman’s Jim Jasper says in the article that demand from China has increased in recent years and is, “very, very important.” Zach Williams, his senior marketing director added that, “No one wants to take an advance position on contract because they’re afraid there will be another tariff down the line that they didn’t account for.”
According to the article, the Almond Board, “estimates that most of the 43 million pounds of almonds that the U.S. shipped to Vietnam in the year through July of 2017 ended up being consumed in China.” Another 141 million pounds went straight to China and Hong Kong.
Increased supply and decreased demand can lead to a glut, by definition. Since 70 to 80 percent of California-grown almonds are exported, a glut could present serious problems for the California farm economy, especially if the tariffs continue through next year.
Read more of Steve Ringhoff’s fine work here.
Leave a Reply