Market Outlook for Almond oil: … … „it never rains in California“

21. February 2014

We already reported in our market report dated 12th February on the general trend. In this outlook we present a much more detailed report on account of new and important market knowledge. The lyrics of the famous Albert Hammond song “It never rains in Southern California“ regrettably are bearing a lot of truth! The OPW management set forth, in order to bring you a detailed update and confirms: “California is running dry: the entire state is currently faced by one of the worst droughts since the beginning of weather recordings, well over a century ago!”. Sales manager Klaus van Zoggel who head the specialty oils and fats department at OPW Ingredients GmbH continues: “based on various reports we have on hand there are real indications that this could be the worst drought since 4-5 centuries. Even Barack Obama paid a visit to California this week to get a first-hand idea of the situation himself”. The “rainy season” from end January till early April is not likely to do justice to its name. The California state governor Jerry Brown renewed his gloomy forecast for the agricultural sector this week. The key products crops; almonds, walnuts, grapes, plums, cherries as well as the wider dairy section are at great risk, which is why he even called for a state of emergency! This sounds, and indeed is very serious! Why is this so significant with regard to Almond oil? Let’s take a closer look at the Almond calendar: • From November till February the market is dormant. This “dormancy” or even “winter-sleep” is the period where the Almond trees gather nutrients, build up strength and prepare for the next season. Whilst defying the cold spells during the nights, usually not a lot happens in this period in the year. This is a period of maintenance and preparation at the plantations for the new harvest cycle to come. Farmers and general market participants alike stare at the sky or rather, ... they scout the weather maps for indications of rain; how much precipitation (rain / snow) will fall, where and in particular, when! • Mid. February till mid. March (i.e. right now!) is the most important period: also called the “bloom”, the tree-buds burst into bloom, turning the landscape into light pink and off-white. Closely followed by the pollination phase, which then leads to the fruit maturing stage of the new harvest. All this takes place in the period March/June. With insufficient precipitation in the preceding months this has a direct knock-on effect on the Almond trees and the tree-yields. When the weather turns and rainfall hits in the critical pollination phase, this inhibits the bees to do their job. This then has an immediate adverse impact on the pollination and the output (yields) of Almonds falls. • From June, and in the course of the summer months (July/August) the Almond trees / fruits continue to mature and the (green) hulls begin to split open. This is when the new harvest preparations begin to pick up pace. The effect of the weather in this phase is moderate; in most seasons it is hot and dry anyway! • From mid. August till end October the harvest kicks in: mechanical “shakers” are locked onto the trees which are vibrated till all the nuts hit the ground – where they remain for 1-2 weeks till another machine collects the nuts after this period of natural drying has been completed. • During the 4th and 1st quarter crop volumes are processed and the “old” harvest starts to trickle into the markets - whilst the “new” harvest starts to take shape, more or indeed less so. New arrivals of whole nuts for the highest quality (Ph Eur) Almond oil and Oilstock for the general (e.g. personal care / technical) grades now start.

The Outlook:

The devastating prediction that more than 80% of the soil in California is drought ridden cannot be ignored! This situation can only normalize – respectively improve appreciably, when from today onwards, there will be good rainfall, at least every other day – till the end of May… As of today, the likelihood or indeed probability that this will happen is extremely small. This means that the market for Almonds and Almond oil is still affected by supply bottlenecks till at least the middle of the year: whole nuts for the Ph. Eur quality are scarce. Organic grade Almonds are equally rare and extremely expensive. The availability of California Oilstock Almonds has been reduced dramatically vs. previous year, whilst at the same time European output has been reduced substantially on account that Spanish production has been slashed by as much as 40%! This places increasing pressure on the market with tight availability; as a result goods have to be controlled with extra care on quality:

Quality aspects:

with Almond oil we also forewarn for contaminations and particularly inexpensive “qualities” (inferior blends with Sunflower oil). We would like to point out the various qualities which are offered to the market: a parallel on hand is Californian Walnut oil. For your reference please visit the extensive OPW BLOG on WALNUT Oil dated 14th February 2014. Adverse quality effects / contaminations in one of Europe’s largest walnut consumption markets (France) in recent history tighten the current situation in Europe. Low volume and deviating qualities must be watched very carefully! OPW Ingredients GmbH and her strategic partners in the origin guarantee the highest quality, complete batch traceability, sterol analysis and we ensure total reliability that no contamination can take place through an extremely competent quality assurance and control in our supply chain whether from the USA or from southern Europe. We anticipate further increasing prices and encourage full cover for the entire year timely.

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