While HIgh Prices and Tighter Supplies Impact Consumption, There will be No 2015 Preliminary Crop Estimate
February 08, 2016
First, let me begin by thanking everyone who responded to my request and sent emails to the USDA regarding their decision not to publish the Noncitrus Fruits and Nuts 2015 Preliminary Crop Data. Your response was overwhelming! As a result, members from various segments of the pecan industry entered into discussions with NASS (National Ag Statistics Service) concerning the decision. Because of your response, NASS agreed to publish the report IF the industry would agree to pay for it. The cost to do so would have been $20,000.00.
Why $20,000.00? Back in November, NASS sent out 4,200 questionnaires to pecan producers across fourteen states. Unfortunately, 70% of the farmers did not return the completed documents. Therefore, the $20,000.00 was needed to hire part-time staff to personally contact and collect the data from the more than 2,900 growers who did not take the time to fill-out and return the surveys. To be very blunt, our industry leaders were embarrassed. How could we cry foul when the very people who have religiously complained about the accuracy of the Government data refused to submit their crop results? Because of the time necessary to collect the data, and assuming no problems in doing so, the earliest NASS could have published the report would have been late March or early April; long after it could provide any possible positive benefit to the industry. Therefore, there will be no preliminary crop data this year. However, one big question remains. If the growers cannot submit data three times a year to the USDA, what will happen when they are required to submit it on a monthly basis to the new marketing board? While the proposed marketing order will place the burden of submission on the first handler, in most cases the Shellers and or Accumulators, how will the Growers who sell directly into the market (i.e. China) respond? It should be interesting.
With respect to the December Cold Storage and Export figures, many within the industry were surprised by the amount of inshell pecans currently held in cold storage. While it is not the first time the industry has seen such December increases, given the weather related problems during the harvest, it was certainly unexpected. However, when one looks at the December export figures (released last week), things begin to take on a clearer focus. As expected, with walnuts selling at $4/lb. less than pecans, the near record high prices of new crop pecans and the lack of readily available product, consumption has been impacted. Worldwide shipments of pecans were down 12.7% (inshell basis) over the same period last year. If not for a slight increase in the shipments of shelled meats, the figure would have been higher. While pecan prices are generally considered to be very elastic, because most meats are used as ingredients, they tend to be less elastic than the price of inshell which is primarily used in one market for one snack application. Worldwide, inshell shipments were down almost 22% while meat shipments were actually up slightly; approximately 2.5%.
Looking specifically at China, overall exports were down almost 29%. What was most interesting was the fact that while overall inshell exports to China were down almost 33%, exports of shelled meats were up almost 48%. This is a trend that started several years ago and continues to be very encouraging. As China’s appetite for pecans matures and becomes more diversified, their buying decisions may begin to play less of a role in overall industry pricing strategies.
As for Mexico, while on the surface it would appear that exports to the US are only slightly behind last year, they are actually down significantly. Inshell shipments from the US to Mexico through December were up almost 125%. When one considers the ‘double counting’ of the meats being returned to the US from the shelling of that inshell, exports from Mexico to the US are down almost 9%.
As usual, should you have any questions, please do not hesitate to contact me at 630-879-5200