November 12,2014 –
There has been a decline in the volume of California’s ag exports this fall and the surging value of the US dollar vs other currencies is not helping. Add the drought to this picture and it could turn out not to be a pretty one.
The rising dollar could contribute to a slowdown in farm exports including crops grown in the Central Valley.This week the dollar index – valued against a basket of world currencies is up around 10% from a year ago – at a 4-year high.
Recently,the dollar hit a 7-year high vs the Japanese yen.The move means US goods are harder to sell overseas because they are purchased in the foreign currency.
The dollar also hit a two year high vs the Euro where we sell plenty of California grown nuts.
Already this fall’s shipment of nuts overseas is lower than it was last year. The Almond Board of California reported Nov 11 that exports were down on this fall’s crop by 10% in September and 17% in October. Domestic shipments were up, helping some.
Part of the equation is a smaller almond crop by around 10% industry sources expect.
Meanwhile US dairy exports fell 16% in September from year ago says the US Dairy Export Council.Volumes have fallen since March when an all time record volume of 200,143 tons was shipped. This marks the lowest monthly volume since February 2013. Shipments averaged176,000 tons a month thru the first eight months of this year.
This decline has been triggered by several developments worldwide; supply and demand triggers that have put U.S. exports at a clear
disadvantage says the Council.
“Milk supplies have increased significantly in Europe and Oceania. Meanwhile, China buying has slowed and Russia instituted a ban on
products from Europe and others.Nonfat dry milk/skim milk powder exports were down 29% versus one year ago and at the lowest level in 19 months. At 32,098 tons, milk powder shipments were also slightly below two years ago.”
Overall Beacon Economics says an analysis of trade data shows exports of agricultural produce from California declined by 6.2% in the latest quarter from one year ago, while exports of processed food products dropped by 4.1%.
Short Walnut Crop
Walnut prices that have soared in the past 2 years could take a hit too some fear.Walnuts depend on exports to keep their value high and now account for 62% of shipments. Exports are up about five-fold since 1985 says the California Walnut Commission. USDA says the 2013 crop averaged just under $2/lb – $1.85 they said. That’s up from as low as 64 cents/lb in 2008.
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The US walnut crop forecast for this fall was expected to be a record 545,000 tons, up 11 percent from 2013’s production of 492,000
tons. But as nut growers neared the end of their harvests, many said their crops may not reach preseason estimates. Almond and pistachio growers say a combination of drought and warm winter weather conspired to reduce harvests in many orchards. Some trees were removed or abandoned due to water shortages.
This week the October walnut shipment report came out showing year to date numbers -Sept& Oct. The report says export of in-shell nuts was down 12.46%, down 14 million lbs and shelled pounds up 24% – about 5 million lbs higher. The upshot -exports are down. And domestic sales are down 11%.
But Visalia walnut farmer Sam Sciacca expects export demand he has seen from Japan this year to help sustain export sales.So far this season shelled walnut shipments are about double last year’s number driven by the perceived health benefits for walnuts in Japan says Sciacca.”Europe could be down because of the strong dollar” he fears.
“I still see prices to stay around where they are at $2/lb or a little lower with demand up and the supply down.”
Both walnut and almond production this year is now expected to be lower but still, the strong dollar will make it harder to keep prices high.
Nut farm land whether almond, pistachio or walnut continues to be the highest valued farmland in every county in the SJV according to the American Society of Farm Managers and Rural Appraisers’ California chapter.