Australian Almonds: Still in the Game

Rising global supply will bring future downwards pressure to almond prices. We expect that, under our baseline currency, operating cost, and export price assumptions, an Australian almond orchard planted in 2019 will likely remain competitive compared with a US almond orchard planted at the same time, when both are at full production.

Report summary

“The cost of water as an input is likely to have the greatest influence on future Australian costs of production,” says Hayden Higgins, senior analyst at Rabobank. “Australian cost competitiveness is clearly eroded as the price of water rises. This is clearly exacerbated if it coincides with a rise in the AUD/USD exchange rate. Water strategies will vary from orchard to orchard. As a result, each orchard will have unique sensitivities to both water prices and exchange rates.”

Besides the water price and exchange rate risks, another risk for the Australian almond industry is the US regaining improved access to the Chinese market – because while the US-China trade war remains in place, a significant demand opportunity in the Chinese market is available for the Australian almond sector to fill. US supply rising quicker than forecast may also pose a risk.