USDA Reduces Estimate for 2010 Pecan Crop

December 10, 2010

As expected, the USDA revised downward their estimate of the 2010 Pecan crop to 258.3 million pounds (Inshell basis) from their previous estimate of 271.3 million. Using the revised estimate, the supply situation is shaping up as follows:

2009 Carry-out  91,033,300
2010 US Crop (estimate) 258,300,000
2010 Mexican Imports (estimate) 105,000,000
2010 Total Supply (estimate) 454,333,300
2009 Gross Consumption/Disappearance 458,058,000

As most within the industry had already factored this reduction into their pricing, these new numbers may have little impact on overall market prices.  Based on the above figures, it has been evident for some time now that the industry would have to lose at least 75 million pounds of consumption just to have any product left to carryout into the 2011 crop.  With prices approaching $7/lb at the Sheller level and over $10/lb at the retail level,this should not be difficult.  Because most retailers did not reflect their replacement costs on the store shelves during the current fall selling season, demand from both domestic and foreign buyers was tremendous.  However, as retailers adjust their prices after the first of the year, the industry will soon find out if they can sell $6-plus Pecans. Based on current reports from the field, many expect that the USDA will again lower the estimate in January, and while this might add to the pricing problem, it should be remembered that while the Chinese were raising the cost of our meat market 60%, they also raised their inventory costs by almost 100%. It could end up being more interesting to see how the Chinese market reacts.