Chinese purchases direct from the orchards are having a disasterous impact on the Pecan market
December 16, 2009
This past Friday, as expected, the USDA reduced their estimate of the 2009 Pecan Crop to 301.2 million pounds (inshell basis) from their previous estimate of 309.2 million pounds. Based on current projections, this is how the supply situation shapes up:
|2009 US Crop (USDA Est.)||301,200,000|
|2009 Mexican Imports(Est.)||140,000,000|
|2009 Total Supply (Est.)||535,391,000|
|2009 Carryout (Est.)||108,072,000|
With the Chinese continuing to purchase inshell at a record pace, prices continue to firm in the face of a tighter than expected supply situation (Chinese purchases are having the same impact on the Almond and Walnut markets). Through October, they had already purchased 11% more than they had by the same time last year. To make matters worse, weather conditions have not helped the situation. An early snow in the El Paso Valley and wet conditions in the Southeast has delayed the harvest thereby further exacerbating the situation. With the Pecan Growers firmly in control of inventory costs, the Pecan Shellers have few options and are left to hope that the inshell market will stabilize in the next few weeks as the Chinese take an expected brief buying respite before their New Year celebration. Of greater concern to the shelling industry is the expected impact on consumption as corporate meat buyers come to grips with their sticker shock.