Most Nut Markets Continue to be Impacted by Firm Prices and Inventory Shortages
February 26, 2010
Because most consumers have yet to deal with $5 Pecans, consumption continues to be very strong. As it will be several more months before current prices filter down to the consumer level, consumption should continue to be strong well into the summer. Shipments to China, while slow at the moment, continue to set new records. On paper, the total supply situation is very good. Mexico will probably set a new record for exports to the US. However, even with near record supplies, based on the latest Cold Storage figures, the industry does not have enough product to handle anticipated demand over the next eighteen months. Obviously the industry cannot ship more than it has, and with the Growers firmly in control of pricing, unless the Chinese decide to quit buying Pecans, European and Domestic buyers can expect to see firm prices and shortages of numerous sizes for the foreseeable future. To make matters worse, this was the 'on-year' crop.
Almond supplies continue to be tight. Even though prices have climbed dramatically since the market lows of May and June, shipments continue at a record pace. Most handlers have been 'off' the market for several weeks now hoping that a good bloom would help the situation. However, while the first week of the bloom went very well, the same cannot be said for this past week. Less than favorable weather has dashed any hope of a record supply situation for the coming year. While it will still be several weeks before an accurate determination can be made as to the size of this year’s crop, there is not enough product in inventory to handle current demand. As such, prices can be expected to remain firm well into the summer and possibly into the fall.
Like the Almond and Pecan industries, purchases by the Chinese have created severe shortages and very firm prices. Because many contracts were written before the Chinese jumped into the market, it would appear that the industry is in an 'oversold' position with most handlers refusing to quote on business of any size. Those that are quoting are only doing so for their regular customers. While this crop may have been the 'off-year' crop, it was still one of the largest crops on record and only slightly lower than last year's record crop. Prices continue to approach record highs, but as in any commodity, the best solution to high prices is high prices.