West Coast Nut September 2019

Figure 4. Baseline U.S. Pistachio Returns to the Grower, 2008/09-2024/25e.
USD/lb
4
3
2
1
0
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19
Average
2019/20e
2020/21e
2021/22e
2022/23e
2023/24e
10th Percentile 25th Percentile 75th Percentile 90th Percentile
2024/25e
"With access to
export markets
unknown,
producers need to
do whatever they
can to protect and
grow demand."
Source: CPC, ACP, CASS, APG, Rabobank 2019
Continued from Page 13
Average Expected Prices Aren't Too Shabby
Based on the average supply-and-demand expectations,
average returns to the grower would range from $2.05/lb
to $2.38/lb between the 2019/20 and 2024/25 marketing
seasons. The price outlook for 2019/20 remains positive,
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as reduced Iranian shipments would propel demand for U.S.
product in export markets. As we look further out, prices
show a slight downward trend, with some variation reflecting
the alternating "on" and "off " years. For example, 2020/21
should be an “on” year, and there’s a 50 percent chance of
having farm prices between $1.73/lb and $2.43/lb (Figure
4). Depending on individual grower yields, there is a high
likelihood that average blended prices will remain at profitable
levels for most growers in California over the projection
period.
But Things can Always get Worse… or Better
In the baseline analysis, Rabo AgriFinance assumes:
1. retaliatory tariffs for U.S. pistachios are lifted after the
2019/20 marketing year, and 2. the Iranian crop returns to
normal levels in 2020/21, increasing export market competition,
particularly in Middle Eastern countries.
Under the baseline scenario, Rabo AgriFinance estimates
about a 26 percent chance of having a six-year average price
above $2.50/lb. The probability that the average price is
between $1.75/lb and $2.50/lb is about 49 percent, while the
probability of having an average price below $1.75/lb is about
25 percent.
Now, let’s look at two different scenarios. In scenario 1,
Chinese tariffs remain in place and gray trade to China is
enforced, adding tariffs to U.S. shipments going to Hong
Kong and Vietnam. In scenario 2, Middle East demand for
U.S. product holds, despite a return of the Iranian crop, while
Chinese retaliatory tariffs are removed. In all scenarios, U.S.
production assumptions remain the same.
Under scenario 1, access to the main market for U.S. pistachios
is constrained by tariffs, and the chances of having a
six-year average farm price above $2.50/lb declines to about
16 percent, with increasing downside risk. The probability of
having an average price below $1.75/lb increases to about
48 percent.
14
West Coast Nut September 2019