Pecan Market Update
May 25, 2012
Based on the recent Cold Storage Report, it would appear that the severe drought that plagued the industry last year is still having an adverse impact on the Pecan market. The recently released figures indicate that worldwide Pecan consumption is off by almost ten percent. While the record high prices of last summer and fall certainly played a part in the drop, the effects of the drought continue to create problems. Due to the dryer than normal growing conditions experienced last summer, most of the nuts harvested in the southwest and Mexico also came in dryer than normal. As such, when shelled, the percentage of halves yielded per pound is down significantly. Some Sheller's have reported half yields as low as 50%. As such, they have had to shell considerably more pounds to get the same amount of halves as they did a year ago. With no ready markets for the additional pieces generated, Cold Storage inventories continue to rise as the pieces are held for later sale. While most sizes of halves continue to be in short supply, with pricing remaining fairly stable, the increased amount of pieces has created a significant price differential between the two. This condition is likely to continue for the next several months.
On the other side of the coin, FAS data appears to indicate that exports to most major Pecan importing countries is up over the lows of last year. China, in particular, has seen almost a 50% increase in purchases from the US although it would appear that they are not going to reach the record levels of two years ago. With overseas buyers continuing to reap the advantages of buying against a weak dollar, this trend is likely to continue, at least until new crop Pecans start coming to market.
As for the 2012 crop, weather conditions during the winter were very favorable. While this is supposed to be an off-year crop, early reports from Georgia and Texas are very encouraging, especially when one considers the severe damage that was inflicted during last summer's drought. While it is still too early to make any long range predictions, and assuming no natural disasters between now and harvest, Pecan pricing in the coming months should be very competitive when compared to Almonds, Walnuts and Pistachios.
As always, should you have any questions, please do not hesitate to contact me at 630-377-2628.