Friday, December 26, 2008

Another bubble bursts...another prediction comes true

Recall my post from Sep 2007 regarding the bubble in Almonds. Keep in mind that 80% of the worlds almonds are grown in the Valley. I sure hope John Madden doesn't lose too much money...

That said, more than a few growers are sweating over a recent dip in the price of almonds, which had previously risen enough to fuel explosive growth in plantings.

Almonds were Kern County’s fourth largest agricultural commodity last year, according to the Kern County Agricultural Crop Report.

Tejon Ranch Co., the Lebec ranching and real estate development company, said in a quarterly report filed with the Securities and Exchange Commission that it received $1.78 per pound for almonds in September. That’s down from a peak of $3.80 in the last three years.

Today, almonds are going for $1 to $1.25 a pound, said Mike Young, an almond grower and president of the Kern County Farm Bureau.

Unable to find sufficient buyers, Young has been reduced to warehousing nuts, which keep for about a year.

“We’re just experiencing the global economic downturn like everybody else,” he said. “Nobody’s buying anything right now.”


Lou Minatti said...

An almond bubble. Well, that's something I have never considered. :-)

Bakersfield Bubble said...

Lou - As you know the world was over run with cheap and easy credit...driving up any and all assets, all analysis of good investment decsisions was thrown away and replaced by a belief that increasing prices would lead to even greater prices.

Now that the commodity price of almonds is down 75% from the peak...all those who purchased land based on these flawed assumptions will meet the same fate as the credit bubble casualties in CRE, RRE, CDS and all of the other alphabet soup of stupidity!

William Rufus Shafter said...

Most of the farmers (as opposed to speculators) I know are glad to see the bubble burst. Being the area that produces 80% of a commodity that is seeing demand increase is sweet. When weather is bad, the price goes up. It's like crop insurance. Eventually the Chinese or the Indians or the Australians (not to mention John Madden) will find places to grow almonds and flood the market, but it would have happened faster at $3. At $1.50-$2.00 everybody makes money and the goose can hang around a little longer.

Peahippo said...

Good gawd, that idiot Mike Young is actually going to sit on those almonds until they spoil, isn't he? Anything but LOWER THE PRICE until he finds a buyer! Schmuck!