The 2012 Pecan Crop-Challenges & Opportunities
August 07, 2012
Mother Nature has again thrown the Pecan industry another curve. Based on recent Grower estimates, it would appear that this year's 'off-year' crop could actually be larger than last year's 'on-year' crop. While the harvest is still several months away, and whether the current supply pattern is simply a fluke or a change in the alternate bearing cycle of the trees, over the past four years the crop has not varied by more than 24 million pounds from one year to the next. In an industry that has become accustomed to experiencing swings of 80 to 100 million pounds from one crop to the next, and has therefore based all of its purchasing and marketing strategies on such swings, the current market conditions have created some interesting challenges, as well as opportunities, for all segments of the industry. Assuming that the crop comes in as currently projected, and barring any natural disasters, the supply situation shapes up as follows:
|2011 Carry-Out (estimate)||122,000,000|
|US Crop (Average of Texas & Tri State Estimates)||279,400,000|
|Mexican Imports (estimate)||140,000,000|
|Total Supply (estimate)||541,400,000*|
*The above figures do not include production in Australia and South Africa the bulk of which is consumed in the respective countries or exported to China.
While current market weakness can be attributed to a number of factors, the greatest contributing factor was the unjustifiably high inshell prices of the past two years. As indicated last month, consumption is down almost 20% since the highs of 2009 and 10% below last year. However, exports continue to be running ahead of last year's reduced levels, and with the weaker prices, domestic buyers have started to express a renewed interest in putting Pecans back into their products or increasing their current usage. As has been stated several times over the past year, high prices will solve the problem of high prices. The reverse is also true. The lower, more realistic prices (relative to supply), will make Pecans more competitive in today's market and should result in increased consumption. If reason is allowed to prevail over panic, the 2012 crop could end up providing some great opportunities for both the Pecan industry as well as the consuming public.