March Pecan Market Update

March 16, 2012

On Thursday, March 15, 2012, the USDA NASS released the long awaited 2011 preliminary crop summary.  As expected, their estimate of the 2011 Pecan crop was revised upwards from 251.7 million pounds (inshell basis) to 271.4 million pounds.  Normally this type of an increase would lead to a weakening in the market, however, based on higher than anticipated shipments out of Georgia in the months of December and January, many within the industry had already assumed a crop of approximately 270 to 285 million pounds.  As such, market prices have already adjusted to reflect the anticipated increase. The report, which would normally have been released in January, was delayed while the USDA reconsidered an earlier decision to eliminate both the December and January Pecan crop estimates (they have since decided to eliminate only the December estimate).  Since the Grower surveys used to generate the data were not sent out as usual in December, but rather in February, one would hope that this figure is a little more accurate than what would normally be published. Based on today's release, the supply situation shapes up as follows:

2010 Carryout 95,107,000
2011 US Crop (USDA estimate) 271,400,000
2011 Net Imports from Mexico (estimate) 110,000,000
Total Supply 496,507,000
Less 2010 Net Consumption (estimate) 394,148,000
2011 Carryout (estimate) 102,359,000

The revised crop figures are good news for the industry. This was supposed to be the on-year crop; however, the severe drought in the Southwest greatly reduced what should have been a very good year. As it will be several months before the true extent of the damage is known, any additional carryout can only help to stabilize prices this fall. Further, a good South African crop, the harvest of which should start sometime in the next thirty days, could also help the market by redirecting some of the early Chinese purchases thereby relieving some of the pressure normally exerted on opening market prices.

As for the market, contracting went very well with most buyers being able to contract their annual needs at or below 2011 levels.  Demand continues to be good with exports to China already approaching 2010 crop year levels (China imported approximately 44 million pounds, inshell basis, between August 1, 2010 and July 31, 2011).  With the exception of Mammoth, Jr. Mammoth and Jumbo Halves, which are already in short supply, prices have temporarily stabilized in the low-to-mid $6 range.  Smaller sized and off-grade pieces are the best bargains as Shellers try to balance their inventories before the busy summer and fall shipping periods.

As usual, should you have any questions, please do not hesitate to contact me at 630-377-2628.