Near Record February Pecan Cold Storage Holdings
March 21, 2014
While the industry will not get a formal USDA crop estimate until July, with each passing day it is becomes more apparent that this year’s crop was much larger than originally forecast. Not only does it appear that Mexico had a larger than originally projected crop, but many within the industry now agree that both Georgia and New Mexico did as well. Even though uncommitted US inshell inventories continue to decline, mainly because China has stepped back into the market, cheap Mexican meats continue to come across the border at prices well below the current market. Adding to the problem is the addition of several new Shellers, who, hungry to enter the meat market at whatever cost, have also contributed to the current market malaise.
The February Cold Storage Holdings would also seem to indicate that the crop was much larger than originally forecast. While recent estimates had put the crop at somewhere around 190 million pounds, based on today’s release, it would now appear that the crop was well over 200 million pounds (another good example as to why the pecan industry needs a marketing order). While the overall inventory figures increased to the second highest February Cold Storage levels ever, when one considers that Mexico shipped over 5.5 million pounds of meats across the border in February, the fact that meat inventories increased by only 1.2 million pounds is further evidence of strong domestic consumption.
As for exports, worldwide shipments are down approximately 40.9 million pounds over the same period a year ago; a 32% drop from last year’s record figures (inshell basis). While this is a significant reduction, it is important to note that all but 2.6 million pounds of the drop can be attributed to China’s reduced consumption. In fact, inshell shipments to Canada, Holland and the UK were up dramatically; as much as 1,400% in the case of Canada. Similar increases can also be seen in shipments to other countries. When China is taken out of the equation, worldwide shipments are down only slightly; approximately 2%. When combined with the larger than forecast North American crop, China’s reduced consumption has helped to keep pecans the preferred nut and allowed other countries, as well as the domestic US market, to expand.
Finally, the USDA has announced the formation of a panel to review the USDA Standards for Shelled Pecans; published July 15, 1969. The standards do need to be revised. However, the proposed review has nothing to do with improving the standards but rather with political correctness gone amuck. The USDA has been tasked with the removal of certain offensive words from the numerous volumes of regulations they oversee. In the case of pecans, the offensive word is ‘midget.’ The term is used in the regulations to refer to both pieces and halves and has been used by the pecan industry for decades. They will also be reviewing grading standards for canned lima beans, processed raisins, pickles and mushrooms where the term is also used. Comments on the proposal, either pro or con, or suggestions for alternative language, should be submitted to Ms. Lindsay Mitchell, USDA Standardization Specialist, (540) 361-1127 or via email at Lindsay.Mitchell@ams.usda.gov no later than May 1, 2014.
As usual, should you have any questions, please do not hesitate to contact me at 630-879-5200.