November 12, 2024

By Gerelyn Terzo, Global AgInvesting Media

AgIS Capital, which acquires and manages high-quality, investment-grade farmland assets, has published its second annual State of the Harvest report. The Boston, Massachusetts-based firm performed a deep dive on the commodities markets, examining the almond, pistachio, and walnut sectors in-depth and analyzing the factors impacting the performance of these permanent cropland assets. Ultimately, AgIS experts shared their near- and long-term outlooks for the nut sector.

In 2024, a perfect storm of pesky inflation, elevated interest rates and geopolitical tensions cast a cloud on the industry. California’s nut market remains in the crosshairs of a strong U.S. dollar that continues to present headwinds to exported U.S. nut crops, resulting in a lingering uncertainty around this sector for permanent crops including almonds, pistachios and almonds — but the dust clouds could be clearing. Below is a snapshot of what to expect in the report.

Almond Market

AgIS Capital pointed to encouraging signs during the 2023/2024 marketing year that suggest the almond industry may have turned a corner. Among the tailwinds, almond shipments reached 2.7 billion pounds, second-highest only to shipments in the 2020/2021 season of 2.9 billion. California almond production and supply both fell for the third straight year, resulting in a multi-year low for carryout, aka ending stocks. Season average pricing improved for the 2023 crop.

However, headwinds remain, not least the strength of the U.S. dollar, threatening to diminish foreign consumers’ relative purchasing power and adding downward pressure on almond prices. With the pros outweighing the cons, combined with several others reasons, AgIS Capital Research forecasts almond market season average pricing to rise once again in 2024:

“Looking toward the 2024–2025 marketing year, we expect the increase in production will be offset by the reduction in carryover, bringing total supply slightly lower than the prior year. Another strong sales year would result in another reduction in ending stocks. If the economy and supply chains hold up, season average pricing should exceed $2.00 per pound, the highest level since 2019,” the report stated.

Pistachio Market

The on-year 2023 was a record period for California’s pistachio crop at 1.49 billion pounds. Production increased by nearly three-quarters year-over-year and almost one-third vs. the last record crop in 2021. Total supply set a fresh all-time high at 1.36 billion pounds, while shipments rose over 30 percent year-over-year to 1.18 billion pounds, also a record. As a result, carryout hovered at 184.6 million pounds and an attractive stocks-to-use ratio of 15.6 percent.

Pistachio exports during the 2023–24 marketing year achieved a record at 931 million pounds, up close to 50 percent compared with the previous record set in the 2022–2023 marketing year. A couple of fierce headwinds remain, including a strong U.S. dollar and the industry’s heavy reliance on China as a trading partner.

“Despite the significant increase in production over the past 10 years, pistachio prices have remained more resilient relative to walnut and almond prices. Thus, pistachio farming has remained profitable for growers with sufficient water rights,” per the report. Despite the potential for increased supply in the 2025 on-crop year, AgIS Capital predicts “meaningful reductions to pistachio-bearing acreage after that.”

Walnut Market

At 1.34 billion pounds, California’s walnut crop fell sharply in 2024 by an estimated 18.6 percent compared with the record 2023 crop, revisiting 2019 levels. Solid snowpacks delivering sufficient water for the season were offset by blight from heavy rains and soaring summer temperatures, introducing the likelihood of a lower quality crop vs. the previous one.

As a direct competitor to U.S. foreign walnut shipments, Chile’s modest 2023 crop combined with shipments depleted ending stocks, leaving a light supply of high-quality walnuts outside the U.S. market until the end of Q1 2025. “Domestic and foreign shipments of shelled walnuts set records during the 2023–2024 marketing season,” stated AgIS Capital in the report.

For a more detailed view of AgIS Capital’s analysis, see the full report here.

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