Kernel Exports Soar as Both the Mexican & US Crops Appear Larger Than Originally Forecast

While prices remain firm in the face of tighter than expected supplies and a continued appetite for pecans, last week’s release of the February Cold Storage figures, as well as US Customs data relative to Mexican imports, would appear to indicate that both the US and Mexican crops were larger than originally forecast.  While the cold storage figures would seem to indicate that the US Crop was slightly larger than the last USDA estimate of 258 million pounds, it is the import figures that shed the most light on the supply situation. Let me explain.

As of March 27, 2022, Mexican exports to the US stood at 173.9 million pounds (inshell basis), 4.2% below last year’s export figure of 181.4 million pounds.  Over the past ten years, based on official Mexican government figures and US Customs import data, the US has either processed, or marketed, 77.6% of the Mexican crop.  Yes, there is some double counting of US inshell sent to Mexico for processing included in the US Customs data (as of 1/31/22, 10.3 million pounds of inshell was exported to Mexico), but that figure does not substantially change the overall picture.  As you will recall, early last fall, COMNUEZ reduced their estimate of the Mexican crop to 224 million pounds, a significant reduction from earlier forecasts (To date, the Mexican Government has not published an official final 2021 crop figure).  Due to the lateness of the US harvest, the import figures were artificially inflated early on by demand in the US and the industry’s inability to fill that demand with US product.  In fact, on November 1, 2021, Mexican imports were up almost 9% over the same period a year earlier.  As the US harvest finally got underway, the amount of product being imported began to drop.  However, based on historical data, it did not drop to levels indicative of a 224-million-pound crop.  Based on current Customs data, the Mexican crop is probably much closer to 300 million pounds.  That is still a significant reduction from the prior year crop of 362.2 million pounds which may help to explain why prices appear to have leveled off.

So where do we go from here?  Consumption remains very strong.  Overall exports through January are up 4.7%, and while inshell exports are down 44.4%, kernel exports are up 15.5%.  Prices on halves continue to remain stable, with many sizes, especially Jr Mammoth Halves, in short supply.  Piece prices continue to firm although still being sold at a loss and well below historical averages.  However, considering where pricing was a year ago, the differential between halves and pieces has now shrunk by over $1/lb.  With severe shortages of several sizes, especially medium pieces, prices should continue to firm and could approach historical norms before the 2022 harvest begins.  Further, until the industry is able to adjust to the loss of Green Valley and Golden Peanut & Tree Nut, buyers should not expect to see any significant price reductions anytime soon.