Regarding the Subjective estimate, one point worth bearing in mind is that the estimate last year proved to be well wide of the mark: the estimate was for a 3.2 billion pound crop, but, as you have noted above, the eventual crop was almost 10% lower, weighing in at 2.9 billion.
Admittedly, the hiccup last year was unusual. Historically, the subjective estimate tends to be pretty close to the mark.
Even so, it leaves us with a lingering question: can we trust the subjective estimate this year, given that it proved so awry in 2021?
I think the key to that question lies in the growing conditions in California.
A major factor behind the shock crop downgrade last year was that many almond growers had pared back their almond acreage, even tearing down relatively young trees, due to the high water costs that resulted from the extremely dry conditions.
Things are looking pretty dire again this year.
I haven't updated the precipitation chart for a couple of months, in part, because the conditions were already so miserable back in March, by that time another year of drought was almost a foregone conclusion.
However, this might be an opportune time for an update.
Here is the running total for precipitation up to the end of April in Fresno, the very heartland of the major almond growing counties of California:
160 mm equates to around 6.5 inches, which is pretty dire, considering the long-term average annual precipitation in that location is just over 10.5.
So far there hasn't been a drop of rain so far this month, and the 14 day forecast indicates that May will be bone-dry.
You'd have to assume that the continuing drought will be leading to more almond acreage being removed prematurely, and there does seem to be some evidence for this: While the total bearing acreage in the official estimate is listed as 1,370,000 acres, LandIQ, which analyses maps of the Californian almond growing area, puts it at 1,338,000, or more than 2% lower.
Apart from the continuing drought, there is good reason to suspect that Californian growers are under much more pressure than this time last year. As was noted in this report from a Californian news site earlier in the week,this year fertiliser costs have tripled and energy costs have doubled. Apart from that, they are also struggling with high labour costs and logistical headaches.
And I haven't yet mentioned the juggernaut, namely, the rate hikes being implemented by the US Federal Reserve.
Sometime last year, I recall one poster note that almond acreage in California was increasing despite the dry conditions.
This was true enough - the almond acerage report last month indicates that acerage increased by 2.5% between 2020 and 2021- but there is good reason to suspect that the increase in acerage in 2020 and 2021 was largely being driven by the rock-bottom interest rates.
So potentially, many almond farmers could be highly exposed to interest rate hikes by the Fed Reserve, and if rates continue to rise, as is the expectation, many growers may be forced to either bulldoze or abandon their orchards.
This is why I tend to think that the Californian crop for 2022 is likely to fall significantly below the 2.8 billion pound subjective estimate.
In winding up, I might for a moment shift the focus from drought to another natural calamity, one of a sudden and explosive nature.
In a post earlier this year, I was pondering whether the powerful eruption of the Hunga Tonga-Hunga Ha’apai volcano in Tonga in the middle of January might exert some influence on the weather patterns. The question hinged on the power of the volcanic eruption, and at the time there was considerable uncertainty with respect to the magnitude of the explosive force of that eruption.
Now, increasingly the evidence seems to suggest that the Tongan volcanic eruption was very powerful indeed.
It seems to have been in the VEI-6 class of volcanic eruptions. To put that in perspective, the last volcanic eruption of comparable force was that of Mt Pinatubo, back in 1991, and possibly, the Tonga-Hunga eruption might have been even more powerful than Pinatubo.
While I suspect the media is not going to have much interest in this research, if these estimates prove to be correct, it is no small deal.
Make no mistake about it, if the volcanic eruption in Tonga really was a VEI-6, the after-effects are sure to have a major influence on the weather patterns for years.
(20min delay)