Export Figures Reveal More Than Just Exports

May 15, 2013

Based on the latest USDA FAS Import and Export figures, as well as the March Cold Storage holdings, one could easily make the argument that the 2012 Pecan Crop was at least 360 million pounds (inshell basis).  Unfortunately, due to the recent decision by the USDA to cancel all future crop production reports, this will be a matter of debate for years to come.  However, based on the figures we do know (last year’s crop figure, FAS & Customs Import figures, 2012 Carryout, etc.), it would be impossible to be handling the current export shipments, as well as a robust US Domestic market, if the crop was only the 302.8 million pounds the USDA projected in their January Preliminary Production Report.  With 2012/2013 Mexican imports down considerably from last year, and US exports up almost 43 million pounds (inshell basis) over the same period last year, the numbers don’t add up otherwise.  While many within the industry have questioned the March Cold Storage figures, they are certainly in line with a crop of 360 million pounds plus.  Further, based on discussions with the USDA, more than 90% of the holdings reported by the Growers, Shellers and public cold storage facilities did not have to be revised or estimated; they were actual figures.  For those conspiracy theorists, based on the current mix of product, who is holding it and where it is being held, it would not have been possible for any one segment of the industry to falsify their submissions enough to account for the current inventory situation.

Looking at the FAS figures, China continues to set new records.  Unlike the Almond industry which experienced a 63% decrease in shipments to China during the month of March, Pecan shipments appeared to be unaffected by the government’s crackdown on imports. Between August 1, 2012 and March 31, 2013, China imported 97.5 million pounds of pecans (inshell basis). With four months still remaining in the 2012 crop year, it would now appear that China could import as much as 110 million pounds from the US.  Adding what they’ve been able to purchase from Mexico, South Africa and Australia, China’s pecan purchases could be well over 150 million pounds this year. While that would also be a record, it is too early to assume that this product is actually being consumed or that consumption in China has again increased.  China regularly makes significant purchases of favored commodities during periods of low prices.  This helps to minimize large price swings during market contractions and allows traders to minimize purchases during the early fall harvest when inshell prices are traditionally higher.

Delving deeper into the FAS figures, overall exports are also up.  Further, for the first time this crop year, exports of meats are also up over the same period last year.  Although the increase is less than a million pounds, it seems to indicate that consumers are finally returning to Pecans as an ingredient, especially in the face of continued high prices in the Almond, Walnut and Pistachio markets.  Similar increases are also occurring domestically as large buyers have finally completed the higher priced contracts of a year ago.  While many retailers still have not reflected current market pricing on the store shelves, consumption is expected to get stronger as the summer and holiday seasons approach.  Based on current crop projections for the other major competing nuts, Pecans should still be the best buy for the dollar during the fall buying season.  Should the 2013 crop turn out to be more in line with traditional off-year crops, the large carry-out should help to keep Pecans very competitive while allowing all segments of the industry to return to a more traditional profit basis.