The Pecan Market Continues to Firm Even with a Larger Than Projected Mexican Crop

On January 21, 2021, the USDA released their 2020 preliminary crop production forecast projecting a final crop of 302.35 million pounds (inshell basis).  This will be the last USDA estimate until they publish their final crop figures in June. Based on currently available information, the supply situation shapes up as follows:

NOTE: Assumes a 50% meat to inshell conversion rate.  The US crop estimate is the USDA’s estimate for the five largest producing states.

As has been the case for the past several months, pecan exports continue to be robust, up 7.6% over the same period a year ago, led by increased interest from China.  While still considerably below pre-tariff levels, exports to China are up 72% over the same period a year ago. In anticipation of additional purchases from China, growers with low count high yield inshell continue to put their crop in cold storage. While this bodes well for a continued firming of the market, the additional cold storage holdings give the potentially false impression that there is sufficient supply to handle demand.  Unfortunately, because Growers are not required to report inventories not yet entered into commerce to the APC, there is no way to determine the exact amount being held and whether it is committed or not.  

With respect to product being held in Cold Storage, the USDA released the December figures today.  While the figures indicate the largest December holdings ever, as stated above, the figures could be inflated due to additional product being held by Growers.  Further, when one compares the historical increases over November’s holdings, the increase is not even close to the largest one-month increase.  Increases in holdings between November and December in every year between 2014 and 2018 were all substantially larger.

With respect to total supply, the Mexican Government released their latest crop estimate earlier this month putting the Mexican pecan crop at 363,233,417 inshell pounds; significantly larger that previously expected.  Considering the fact that Mexico does not have the infrastructure to store large quantities of pecans, and the fact that imports from Mexico are currently running 25% below last year’s figures, one has to ask, where all of the pecans?  

Finally, since July 1986, around this time every month, I would gather the Cold Storage data, chart it, analyze it then call George Martin to discuss it. They were candid discussions and oft-times very heated.  George wanted to know what I really felt, not what I thought he wanted to hear, and many times we didn’t agree, but that’s what he wanted. We met in September 1984 at the US Coast Guard Reserve unit in Gary, Indiana. At the time, I was a Lieutenant Commander, he was a Lieutenant and my subordinate. Over the next two years, we became close friends, so much so, that I left Standard Oil of Indiana in June 1986 to join him at Navarro Pecan Company.  It was the beginning of a life-long friendship.  We lived close enough that our kids went to school together and our wives spoke often. At the time, I knew that George was an influential figure in the industry, but I had no idea how influential (he was also a bit controversial).  To say that George was a unique character would be an understatement. He had a quick wit, unique way of speaking the English language and would give you the shirt off his back. He was also the fiercest of competitors. Over the course of his career, he changed the pecan industry, from how we purchased inshell to how we looked at marketing and market development.  He was an advocate for good communications with all segments of the industry and was never afraid to share his knowledge. He accomplished so much in his two years as President of the National Pecan Sheller’s Association that he was asked to serve a third year; the only person to ever do so. And the stories. No one could tell a story like George, and he always had one.  God forbid that you asked about how to deal with an oversupply situation as you would eventually hear every detail about the 1963 crop. George grew up in the pecan industry and was a walking encyclopedia of its history and those that had been a part of it.  He could answer any question and could do so with both a date and a market price.  While a fierce competitor, no one respected their competition more than he did.  When George and Sam DiGregorio would go head-to-head, everyone else ran for cover yet the two remained close friends.  George always said that there was no one better at running a pecan plant than Sam and that no one put together a better pack. As many of you know, George passed away this past week.  While no man is indispensable, I do believe that some are irreplaceable.  George was just such a man. There are no words to express the loss I feel at this time, but I will be eternally grateful for what he taught me and for his friendship. George, I miss you!