California water year

Lately, the daily news-cycle has been dominated by the two big stories from the United States, namely the recent presidential election and the worsening epidemic in that country, and probably not without some good reason.

But it is worth taking a moment to reflect on one slower-paced story from the west coast of the US, which is at risk of getting drowned out by the partisan noise and fury in the wake of the US elections.

The monthly update from the US Drought Monitor was released last week. As can be seen in the graphic shown below from this report, the almond growing regions of the Central Valley continue to dry out as a result of the sub-par precipitation over the past year or so.



The California Water year runs from October 1, until the end of September the following year. The total precipitation that was recorded over the last water-year, that of 2019-2020, was well below the long term average. In Fresno, the geographic heartland of California's almond growing belt, some 7.5 inches of precipitation were recorded in the 12 months up to 31 October.

By way of comparison, the long term average for Fresno is 10.6 inches of precipitation over this same 12 month period. So on the face of it, it looks as if California is in the early stages of a drought. Whether or not things will pan out as such depends on the weather conditions over the months ahead.

Most of the precipitation in the California water year falls between the months of December and March. The next four months are thus critical.

If rainfall across California is once again below the long-term average over these four months, this would suggest that the dry conditions evident across the 2019-20 water year were not an anomaly, and conversely, should serve as an indication that California is entering another period of drought.

If this turns out to be so, it is unlikely that the drought will be as serious as the recent major drought running from 2011-2017.

Such extended droughts have been rare within living memory, and apart from the event alluded to above, there have only been two other droughts of this magnitude since 1940, the first being that which spanned the 1940s, and the second being the 'big dry' from 1986 and 1991.

That said, shorter droughts, lasting three or four years, are very common in California: for example, between 1951-53, 69-71, 74-77, and 2000 to 2004. So if California is headed into drought once again, a short three/four year drought is the most likely scenario. Of course, even this type of short drought would be unwanted, further adding to the pressures already confronting Californian growers.

Bear in mind is that the there is some reason to suspect that the Trump years saw relatively limited almond planting activity across California, in part because of the impact of rising labour costs on Californian growers, but also because of the hit from the China tariffs. And you'd have to assume things must have been even tougher over this 'year of the virus'.

All up, if four months from now it looks like California is set for another year of below-average rainfall, this could be a strong signal that almond prices are set for a steep rise over 2021 and 2022. It might thus be wise to keep an eye on the weather in California's almond growing areas over the months ahead.