Pecan Market Update

June 23, 2009

This past Friday, June 19, 2009, the Tri-State (Louisiana, Mississippi and Arkansas) Pecan Producer's Association concluded their annual meeting with the first crop estimate of the season.  While it is still very early in the growing cycle, and while the estimates provided for several of the states could be debated, the overall estimate of 299 million pounds is certainly in line with what many within the industry expected to see.  When one considers the larger than average size of the previous two crops, the potential damage caused by the April freeze in East Texas and the copious amounts of rain that have fallen in the Southeast, it is hard to argue with the current estimate.  As stated in the April Pecan Crop Update, since 1990, the average 'on-year' crop has been approximately 329 million pounds. This figure drops to approximately 310 million pounds if the 1999 (406.1 million pounds) and 2007 (387.3 million pounds) crops are removed from the calculation.  Assuming that the current estimate turns out to be correct, that the Mexican harvest turns out to be in line with historical averages and that consumption remains constant, the supply situation could shape up as follows:

2008 Carry-in (est.) 85,000,000
2009 US Crop (est.) 299,000,000
2009 Mexican Crop (est.) 140,000,000
TOTAL SUPPLY (est.) 524,000,00

Based on the USDA Cold Storage figures that were released yesterday, consumption continues to be very good.  Further, because the USDA continues to revise upward last year's cold storage holdings (which if they continue to be revised upward at the current rate will add about 6 million pounds to the 2007 carry-out figure), the total supply situation for 2009/2010 (524 million pounds) will not be that much greater than that of 2008/2009 (497 million pounds). Jr. Mammoth Halves, Jumbo Halves and Large and Extra Large Pieces continue to be in short supply, and being the 'on-year' crop, the Chinese will probably buy at least as much as they have averaged over the last two years.  What is even more interesting, should they continue to increase their purchases of pecan meats, as has been the case over the past twelve months, those shortages could get even worse.  As such, while meat prices will probably fall once the harvest kicks into full gear, there is no reason to expect a market collapse.  One could also expect to see a significant price difference between the aforementioned items and other half and piece sizes.