USDA Releases Preliminary 2014 Pecan Crop Estimate

January 25, 2015

The USDA, National Ag Statistics Service released their 2014 Preliminary Crop Summary today, and as expected, lowered their projection for the 2014 pecan crop to 265,370,000 pounds (inshell basis). While many within the industry feel that the figures for Arizona, Louisiana, Oklahoma and New Mexico may still be overstated, using the new USDA figure, the 2014/2015 US supply situation shapes up as follows (inshell basis):           

                                                Component                             Quantity                                   

                                    2013 Carry-Out                                    171,626,000

                                    2014 US Crop (USDA Estimate)           265,370,000

                                    2014 Mexican Imports (NFF Est.)        160,000,000          

                                    2014 US Total (NFF Estimate)             596,996,000

*Note: 2013 US Total Supply was approximately 611 million pounds (inshell basis)

As for the market, unlike prior years where the Chinese entered the market early in the fall, purchased what they needed for their New Year and then exited the market in early December, the smaller than projected, poorer quality crop in Georgia did not allow them to do that.  Unable to get what they needed, the Chinese never exited the market and the expected price decline never occurred.  Further, Growers who assumed that they would have a very good crop and presold inshell contracts at very high levels were left to scramble to cover them which only served to exacerbate the problem thereby helping to keep inshell prices high. On the other side of the coin, Sheller’s who wrote early low-price contracts in anticipation of that price decline never got the opportunity to buy the market down.  As such, they have put themselves in the position of having to deliver less than profitable contracts.  Buyers need to understand that overall kernel sizing is considerably smaller than expected, and as such, an already tight supply of Mammoth, Jr Mammoth and Jumbo halves has now gotten even tighter. Pieces, especially Extra Large, Large and Large Medium are also in short supply.

As for product coming from Mexico, while the US shelling industry has always purchased meats from south of the border, increased competition from the Mexican shelling industry over the past three years has now made the shelling of US pecans, in the US, only marginally profitable.  Based on current import figures, if Mexico continues to ship product across the border at levels similar to those of the past few months, they could be out of product by May.

Finally, no one should forget what happened to pecan consumption when prices climbed over $6/lb. Putting a slight twist on a Yogi Berra comment, could it be ‘Dejvu all over again?’