September 2010 Nut Market Update

September 03, 2010

WALNUTS

While many in the industry expected a large crop, the 510,000 ton estimate released today surprised almost everyone.  Initial estimates had projected a crop of approximately 473,000 tons which, if realized, would have been a record.  Coming off last year's 437,000 ton crop, the industry needed the additional supply to handle increased demand from China and the Middle East which had kept prices relatively firm. However, even with strong demand, a late harvest and a smaller than usual carryout have caused prices to weaken after the release of the initial estimate.  While China continues to put pressure on the market, the new figure was so unexpected that most processors have decided to step back and re-evaluate their positions.  As such, most have withdrawn from the market until after the holiday weekend.

ALMONDS

Demand continues to be very strong.  While prices had fallen over the past few months, increased demand from China has moved the market considerably higher.  Nonpareil inshell prices have moved up dramatically with current prices being quoted in the $1.85/lb range. On a meat basis, that equates to about $2.64/lb. While the crop is currently forcast to be a record 1.65 billion pounds, early yield reports on the Nonpareil crop have not met initial forcasts.  As such, most processors are hesitant to quote long term contracts until they have more yield data.

PECANS

Supplies continue to be very tight as consumption continues at a record pace. As is the case with the Almond and Walnut markets, China continues to drive prices.  Having purchased well over 80 million pounds out of the 2009 crop (inshell basis), China now accounts for over 51% of all Pecan exports and approximately 30% of total sales.  Going into the 'off-year' crop, many within the industry were concerned that increased prices would slow consumption; however, with projections for a larger than normal 'off-year' crop, should the crop come in as currently forecast, overall supplies will not be significantly different than last year.  Like the Almond and Walnut crops, it would appear that the Pecan crop is a few weeks behind schedule.  Further, there are still two months to go until the end of hurricane season.  As such, a lot can change before the nuts are actually put into the barn