Sure.
> When you say "nut trees require a lot of water, and thus nut prices are going up in the current drought" this implies that supply of nuts went down during the drought.
No, it doesn't. It could equally (in a real market with humans instead of an ideal market with rational actors -- particularly, in a market in which the perfect information assumption of rational choice theory does not hold) mean that demand for nuts increased because purchasers (not necessarily consumers -- nuts are purchased by lots of processed-food makers) expected supply to decrease in the drought, and there was a desire to stock up before that occurred.
> if some farmers are increasing acreage, there must be others who are decreasing by even more, otherwise prices would be going down, not up.
Even if we assume that the price increase must be supply driven (rather than demand driven based on price expectations based on beliefs about future supply), this is wrong, because it assumes that production per acre is constant, rather than, e.g., declining in a drought. If production on the same land use drops in a drought, then you could have reduced supply driving prices up without reducing land use -- depending on elasticity, this could conceivably even increase the total revenue of almonds sold -- leading to increased incentives to bring more acreage into production.