USDA Releases their 2017 Pecan Crop Estimate

October 12, 2017

The USDA released their only 2017 pecan crop estimate today projecting a crop of 277.4 million pounds (inshell basis).  Assuming that number is correct, the supply situation shapes-up as follows:

While this is a reduction in supply of 14.2 million pounds, there should be more than enough pecans to handle projected consumption.  Why?

1.     The USDA estimate only covers 8 of the 15 pecan producing states. The other 7 are projected to produce between 10 and 20 million pounds bringing the actual size of the crop closer to 295 million pounds.

2.     China will purchase approximately 20 million pounds less than they did in 2016.  At the moment, they have an oversupply having purchased the bulk of the South African crop.  With their New Year later than a year ago, and prices being quoted by US Growers bearing no relation to the actual market, they can afford to wait until prices return to more realistic levels.

3.     The US Shelling Industry did not fare well in 2016 having to spend more on inshell than the meat market would justify.  Like the Chinese, they will avoid buying any inshell until prices return to more realistic levels.  They cannot sustain a second year of losses.

4.     Pecans will again be one of the highest priced items in the nut market basket. Walnuts are currently trading at $3.00/lb or more below pecans.  Pecans compete in 60% of the channels of distribution with walnuts.  Unless the pecans are going into butter pecan ice cream, pecan pie or turtles, buyers can easily substitute walnuts.

5.     Almonds are trading over $2.00/lb below pecans.

6.     Contrary to what some traders are saying, US consumption continues to suffer due to high prices. That won’t change until inshell prices accurately reflect current market conditions.

One of the benefits of the new American Pecan Council is the information exchange it has fostered between growers and shellers.  Prior to the Council’s creation, there was little open discussion between the two segments of the industry.  That is slowly changing, and while there are still those who refuse to evaluate market conditions, prices of competing nuts, buying habits of foreign purchasers, etc. during the establishment of their selling prices, this exchange of information should help to stabilize pricing, eliminate some of the large price swings of the past and hopefully lead to inshell prices more in line with market demand.