By tree nut pricing standards, almonds are still cheap! Almond prices have increased more than any tree nut, but as the best tasting, most nutritious and versatile nut, almonds are by far the greatest value in the category.
As part of our mission to maximize the return for each grower who entrusts their almonds to Blue Diamond, we must reflect the higher global market prices for almonds in the prices we charge our retail customers. We carefully watch the market to make sure our Blue Diamond products remain a value to our consumers. We are fortunate that Blue Diamond advertising and product innovation have successfully offset the price increases of the past 18 months.
Based upon past experience, growers are concerned that almonds are in a pricing bubble. I think a quick review of history can mitigate those concerns. It is true that almonds are nearing their historical high prices of May through August of 2005. The stimulus for that pricing peak was three consecutive smaller crops and a record low carryout. Prices doubled from April 2004 to May 2005 to reach $4 a pound on Nonpareil. Within 6 months, prices fell dramatically back to $2.50 a pound as the arrival of a record new crop ended the pricing run-up.
Our prices are similar to 2005, but our market dynamics are very different:
1) This time there is a steady three-year rise in almond prices, nothing like the short-term spike from the past. Demand is driving our prices rather than a lack of supply.
2) Blue Diamond just received the largest crop it’s ever handled and California could discover it harvested a 2 billion pound crop. Whatever the industry can produce, we can sell profitably. By contrast the 2005 crop was only 900 million pounds.
3) With trees recovering from a record Nonpareil harvest and a chronic shortage of water, even perfect bloom weather is unlikely to instill confidence. The promise of a larger crop will not crash the market in 2014.
Water will be the greatest determinant for future crop availability. We can get emergency declarations, but the fact remains that our reservoirs are empty, the mountains are brown and our ground is dry. The forecast models that I see do not instill confidence in an upcoming deluge of rain in the valley or snow in the mountains. Bloom will be upon the state earlier this year with a warm, dry winter. My New Year’s wish remains for a March miracle rain event!