With the drought easing in parts of California, this year's almond harvest is shaping up to be a record haul for the state that could help its growers crack the nut on more sales.
The harvest underway in California's San Joaquin Valley is expected to result in an estimated 2.05 billion pounds of almonds this season, according to the U.S. Department of Agriculture. That's up about 8 percent from last year and would shatter 2011's record crop, which weighed in at 2.03 billion pounds.
That level of supply should lead to lower almond prices that "flow through" to the U.S. consumer, spurring additional demand, Goldman Sachs analyst Jim Godsil told investors. It could also contribute to signs of stabilization in the industry.
Following a 6.4 percent decline in shipments during the year ended last July, the crop's shipments for the current crop year are 1.811 billion pounds. That's just slightly lower than last year's 1.813 billion, according to the Almond Board of California.
While domestic numbers have been slower to recover, export volumes are up by almost 4 percent, with the four months ended July producing double-digit percentage growth in shipments. International demand has picked up as prices on California's almonds have moved lower.
Yet some are concerned there may be overcapacity in the state's almond industry, which produces about 80 percent of the world's production. That could weigh on pricing down the road and ultimately hurt farmers' profits.
"Everybody can see that the almonds have been overplanted," said Bill Diedrich, who has grown almonds near Fresno since the early 1990s.
Consumers have already taken an interest in almond products because of their "heart health" benefits. Almond milk, for example, has recorded a 30 percent compound annual growth rate over the last four years, according to Nielsen data. Sales of almond milk reached $938 million in the 52 weeks ended July 2, a nearly 8 percent increase from a year ago, the firm said.