Nut Market Update

October 27, 2009

PECANS

Based on the most recent Cold Storage figures, it would appear that the industry shipped a record 429 million pounds (inshell basis) of Pecans in 2008/2009.  With the current 'on-year' crop estimated to be approximately 309 million pounds (USDA October estimate), there should be enough Pecans to handle 2010 demand. With China continuing to exhibit a voracious appetite for Pecans, and assuming that consumption remains at or near current levels, prices can be expected to remain firm well into 2011. Further, many popular sizes, including Mammoth and Jr. Mammoth halves, will continue to be in short supply thereby forcing both foreign and domestic buyers to either alter their buying preferences or be ready to pay much higher prices for their product. However, as long as prices do not climb dramatically in the months ahead, the weak dollar and the firming prices of both Almonds and Walnuts should help to keep Pecan sales robust.

ALMONDS

Back in June, NASS projected a crop of 1.350 billion pounds (kernel basis).  This was down 7% from the May Subjective Estimate and approximately 17% lower than 2008 crop receipts.  Based on current receipts, this figure could turn out be a little optimistic.  Many Growers continue to report lower than anticipated yields. As such, many within the industry are now projecting that the crop could actually be smaller than 1.3 billion pounds. Record shipments and lower than anticipated yields have firmed prices considerably on most varieties and sizes over the past few months (Nonpareil being the only exception). In the case of Standard Unsized, prices have actually increased 50% since June.  However, even with firmer prices and shortages of smaller sized kernels, Almonds continue to offer the best value for the price.

WALNUTS

While the initial crop estimate projected a crop of 415,000 tons (inshell basis), many within the industry are now saying that the crop could be less than 400,000 tons. Record shipments, combined with lower than anticipated yields have caused prices to firm dramatically since the market lows experienced in January.  Severe storms over the past few weeks haven't helped. Available supplies of both regular Combination and Light product are limited. As such, other than 'close in' spot shipments, few processors are willing to provide any quotes for fear that they may be selling too cheap. Prices for straight Light Halves are actually starting to approach current Pecan prices.  If Pecans continue to be priced at or near current levels, the higher Walnut prices could create a buyer backlash and a switch to cheaper alternatives for some applications