USDA November Cold Storage Holdings the lowest in 13 years

While I expect that few people will be reading this until later next week or early in the New Year, I felt that it would be nice to remind our industry of some of its recent history. Earlier this week I received a call from a Sheller that has been around for a lot longer than me. In discussing the current market situation, he recalled a newsletter I put out several years ago and thought that it might be time to re-publish part of it, so here goes.  What do the following names have in common: Pet/Funston, Standard Brands, Beatrice Foods, Leonard Farms, Nut Tree, Gold Kist, Ace Pecan, The Tracy Lucky Company, SNA, Morvan Partners, The Diamond Walnut Cooperative, Southwest Nut, Terry Lynn, ADM/Golden Peanut & Tree Nut, Nueces and Green Valley?  For those not familiar with our industry’s history, at one time, the above companies were all major shellers.  Today, because they either would not, or could not adapt to the changing landscape, they are gone.  In several instances, their entry into the industry was hailed as a rebirth because they brough new capital investment into an industry starved for capital.  Several entered with great fanfare and promised to reshape the industry. However, even those with billions of dollars in net worth, either disappeared or were sent packing by an industry that doesn’t operate like most other commodity industries.  Why did that Sheller ask me to re-publish this part of my article, because currently there are at least two large shellers who seem to think that they can do what the others couldn’t. Now, instead of just one loose cannon, we have three.

Today’s release of the November Cold Storage holdings further reinforces the fact that unless prices increase dramatically, several more companies could join the list. Based on today’s release, the industry had the lowest November inventory since 2010; 97.4 million inshell pounds.  Yes, the lateness of the harvest did contribute to the sparsity of inventory, but it was not the primary reason.  Continuing to try to justify low prices in the face of historically low inventories would be like Mrs. O’Leary trying to explain that it wasn’t her cow’s fault, yet their ambivalence continues to draw the entire industry into a downward spiral.  Part of the problem certainly rests with the big corporate buyers who refuse to pay their suppliers in less than 90 or 120 days while beating them up with prices that either do not exist or are outliers; all the time professing to want to be good corporate partners.  In this industry, history has shown us that no one company can go it alone, nor can one segment or growing region.  As I’ve said before, if the shellers do not have the backbone to stand up to the large corporate buyers, or continue to sell product below profitable levels, then those who supply those shellers should not sell to them.  As a mentor of mine once said, “I cannot shell coconuts in my plant.”

Merry Christmas