While Hurricane's Harvey & Irma Do Significant Damage to the Crop, Supplies Still Appear to Be Good

A lot has been said about the damage to the Texas and Georgia crops as a result of Hurricane’s Harvey and Irma, and while there was significant damage, especially to the Georgia crop, it could have been a lot worse.  It could take weeks to clean up the downed trees, broken branches, etc., and because the bulk of the destroyed trees were young, Georgia’s production will be impacted for years to come. Fortunately, the state was originally projected to have a good crop, and while the market did experience some firming in the days that followed, it now appears that even with the projected losses, pecan supplies will still be sufficient to handle projected consumption.

Today’s release of the August Cold Storage Holdings again indicates that high prices have had an impact on consumption.  In a month where shipments are historically in the 25 to 35-million-pound range (inshell basis), the industry shipped an anemic 18.4 million pounds.  As of August 31^st, the industry was carrying 32.3 million more pounds than it did a year ago at the same time.[1]

With respect to exports, as mentioned last month, there appeared to be significant errors in both the Chinese and Mexican export figures.  Earlier this month the Department of Commerce, Census Bureau, admitted that errors were made in six of the past twelve months regarding shelled pecans shipped to China, Vietnam and Hong Kong.  Earlier this week they also admitted to finding errors in the shelled pecan figures for Mexico.  Six months of corrections have been sent to the USDA, FAS for publication.  However, FAS has indicated that until they get the corrections for Mexico, they will not be correcting their figures.  It is important to note that the errors in no way impact the price or supply of pecans.  All the corrections do is shift where 2016 consumption occurred.  Based on the revised figures, China only imported 80.4 million pounds (inshell basis); 77.2 million pounds of inshell, 1.4 million pounds of shelled pecans (inshell conversion 3.2 million pounds).  The changes also impacted total exports dropping them to 218.7 million pounds (inshell basis). 

While overall consumption increased 4.1 percent in 2016, primarily due to China, the US domestic market again took a hit; although less than originally thought.  US consumption was down 3.8 percent over 2015 levels and 12.9 percent since 2014. Considering the non-competitive prices of pecans over the past 24months, all-in-all, not a bad showing.