Pecan Consumption Continues to Increase

November 22, 2019

Today’s release of the USDA October Cold Storage Holdings, and their revision to the September figures, did little to change the consumption figures for 2018/2019.  Based on the revised figures, 2018 supply and consumption shaped up as follows:

2018 Available Carry-in (USDA minus APC Sept. Commitments)             69,911,915

2018 US Crop (USDA)                                                                                    242,920,000

2018 Mexican Imports (FAS)                                                                        322,218,000

2018 Supply available to US Marketers                                                     635,049,915

Less 2018 Carry-Out (USDA minus APC Sept. Commitments)                  80,478,376

2018 Apparent Consumption                                                                      554,571,539

Mexico continues to be a conundrum.  Last year’s crop was supposed to be small yet exports to the US set a record.  This year we’ve been told that Mexico again has a small crop  However, based on USDA Market News reports, pecan imports from Mexico, through November 18th, are up 6.2% over the same period a year ago.  Part of last year’s increase could be explained by the fact that while China was not purchasing inshell from the US, due to heavy purchases the year before, they didn’t need to buy large quantities of inshell.  As such, Mexico’s extra volume was shipped to the US.  That is not the case this year.  There is still an ongoing trade dispute between the US and China, and China entered this fall with little or no inventory.  One would have assumed that those needs would be filled by Mexico, so either China is again not buying large quantities of inshell or the Mexican crop is much larger than currently projected.  Regardless, if recent reports of a smaller than forecast US crop are true, the additional product will be needed to handle anticipated US/EU demand.

Finally, for those who have been able to survive the insanity known as ‘pecan shelling,’ what is going on now in the industry is not something new. Several times over the past twenty-plus years, one or two shellers have felt it necessary to ‘give away’ their product, hoping to gain market share and destroy their competitors, only to find themselves succumbing to their greed, and in several cases, they themselves going out of business. Having failed to learn from history, two major Mexican pecan shellers appear to be intent on repeating it. Based on currently available data, and what is going on in both the almond and walnut industries, there is no justification for their current pricing strategies.  Prices for both almonds and walnuts, in the face of shorter than anticipated crops, have continued to climb.  Prices are now beginning to approach that of pecans.  In the past, whenever this has happened, pecan consumption has increased dramatically, both at the retail and industrial levels.  Recently released USDA FAS data, as well as current USDA Cold Storage Holdings, indicate that total exports are up, kernel exports are up, inshell exports are up, total consumption is up, and best of all, US consumption is up.  Apart from 2018 crop year inshell exports, all of the aforementioned increases are above last year’s record numbers yet these two shellers seem to feel that they have no choice but to ‘tank’ the market. Growing up, my Father would always tell me that if something sounded too good to be true, it probably was. Buyers need to remember that those seductively low prices will do them no good if the company that they contracted with can’t ship or goes out of business.  Try explaining that to the marketing department.