The USDA Releases the first 2010 Pecan Crop Estimate
October 14, 2010
This past Friday the USDA released the first official estimate for the 2010 Pecan crop estimating the crop to be 271.3 million pounds (inshell basis). This figure is very close to the Louisiana Grower's estimate of 274.3 million pounds and not far from the 280.5 million pounds estimated by the National Pecan Sheller's Association. Assuming that the estimate is correct, this is how the supply situation shapes up:
|2009 Carry-in (est.)||90,000,000|
|2010 US Crop (est.)||271,300,000|
|2010 Mexican Crop (est.)||105,000,000|
|TOTAL SUPPLY (est.)||466,300,000|
While the 2009/2010 crop produced the second highest total supply of Pecans in the history of the industry, it also saw Pecan meats soar to record levels later in the year. High Almond & Walnut prices throughout the bulk of the 2009/2010 crop year, a lack of available Walnut meats, cheap early Pecan contracts and heavy purchases of inshell by China throughout the 2009/2010 crop year led to record Pecan consumption. The purchasing power of the Chinese has altered where and how Pecans are sold. As a result, for the past two years, with the exception of China, exports to almost every other country have been down and this trend is likely to continue. Further, in the short run, the strengthening of the dollar against the Euro will not help sales to Europe. Net consumption is currently running at or near 440 million pounds resulting in severe shortages of most sizes of halves as well as large and medium pieces. As Growers prepare to sell their crops at record levels, Sheller's must figure out how to balance demand with the expected loss in consumption and the lower market prices that come with the loss. High prices have a habit of solving the problem of high prices, and as was seen most recently in 2000/2001, a short crop can become very long. With a record Walnut crop, a larger than expected Almond crop, an expected drop in inshell purchases by the Chinese and Pecans now selling at prices higher than all other tree nuts (Macadamias and Pistachios excepted), an incorrect purchasing strategy now could lead to a repeat of the losses experienced by the Shelling industry in 2000/2001.