Nut Market Update

January 23, 2009

PECANS

The USDA released their final estimate for the 2008 Pecan crop today. Based on currently available information, the total supply for

2008/2009 shapes up as follows:

2008 Carry in (44% conversion rate) 186,570,000
2008 US Crop (estimate) 191,080,000
2007 Mexican Imports (estimate**) 100,000,000
2008/2009 Total Supply (estimate) 477,650,000

** The Mexican Import figure is estimated based on FAS Mexico import data and does not take into account any double counting of US crop sent to Mexico for shelling then returned for processing.

With gross consumption currently running around 390 million pounds, it would appear that there will be plenty of Pecans to handle anticipated requirements but not enough to cause the types of market erosion seen last fall in the Almond and Walnut markets.  As such, prices are going to be near last year's levels thereby keeping Pecans relatively competitive when compared to Almonds and Walnuts.

ALMONDS

Based on the December shipment figures, 1.487 billion pounds, this year's Almond crop should easily surpass the 1.5 billion pound estimate. December shipment levels were only slightly below last years levels, and overall, the industry has shipped slightly more than they did last year at the same time.  While pricing continues to be weak, there is considerable concern over the current water situation throughout the State.  Both rain and snow fall are well below historical averages leaving reservoirs throughout the state so low that there will be no water allocated for agriculture this year from either the State or Federal water allocation programs.

WALNUTS

The California Walnut Board released their 2008 final crop receipts figure putting the crop at 434,000 tons, 59,000 tons (16%) more than their earlier crop estimate and 79,000 tons larger than the previous record crop.  While the new figure will have some impact on current price levels, many within the industry had already based their pricing on the assumption that the crop would be over 400,000 tons. Lower prices have already had a positive impact on shipments as was shown in last months above average shipment figures.  As such, there is little incentive to further discount prices.