Monday, March 21, 2011

The Almond Farming Bubble

Bet you didn't know there was an almond farming bubble in 2005! (Because I forgot to post this Wall Street Journal article about almonds):

[M]any of the people jumping into almonds are doing so even as prices for the nut have been sliding. In 2005, farmers received $2.80 to $4 per pound of almonds. Now, about a third of the way through the almond harvest, farmers are getting $1.50 to $1.80 per pound. In a classic agricultural cycle, high crop prices resulted in a rush to plant trees, leading to a market glut of nuts. Meanwhile, almond production costs have also risen -- especially for the bees that pollinate the flowers and the diesel oil that fuels the machines that shake the nuts from the trees, sweep them from the ground and truck them to market.

"A lot of people are jumping on the tree-nut bandwagon," says Mike Iliff, senior appraiser for Fresno Madera Farm Credit, an agricultural lender. "They'll plant and grow and keep doing it until they drop the price down and satiate the market. You can always depend on agriculture to stab itself in the foot."
Let's follow up on the almond market. According to this Western Farm Press article from 2009, the "world financial crisis has hit the almond industry," driving the price of California almonds down to seventy cents!

The latest news is that almond farmers are hiring Asian movie stars to promote nuts, and prices have apparently bounced back well above $1.


whydibuy said...

What happened to the carry trade bust from Japan?
I thought its forced unwinding was going to be the doom of us,lol.

Another bear story that busts out.

Since the market is surging, cb has to dig up some negative happening in agriculture.

whydibuy said...

Oh, btw, Tommy demark only has a few days left in March for his 15% plunge we were supposed to get with his perfect storm call, lol.

Another foiled, foolish bear making a wild call. Wild calls are good for talking heads. If it happens to occur, he gets fame. If it bombs, as usual, its forgotten and he shows up on cnbc with another idiot chart to "prove" doom is imminent, lol.

Joe Nelson said...


I'm new around here. What's your bullish thesis for this market? Do you see a turnaround in the US economy? Are your riding on Ben B's tidal wave of inflation?

CP said...

I have already asked everyone to post their favorite long idea (if they are a bull), so that we can get to know each other better, but most of the commenters passed.

eahilf said...

...but most of the commenters passed.

Right now I trade, I do not invest.
But when UNG was near its low I did take a position, and plan to hold it.

Regarding trading, I have been selling volatility (puts) on the dips for the better part of two years now, with nice results (not spectacular because I'm a bit cautious, but good), since buying the dips has been a very profitable trade for the bulls. I'm neither bear nor bull, which is why I trade. But generally, I feel better selling volatility than buying the dips. Of course I also go long and short, including via ETFs, sometimes the leveraged ones (although I'm trying to wean myself of that).