January Pecan Market Update

January 24, 2011

This past Friday, two significant figures were released by the USDA, National Ag Statistics Service. The first, and most significant, was the revision to the final 2009 Pecan Crop figures. From a background standpoint, when the final figures were released by the USDA last July, they put the 2009 Georgia Pecan Crop at 90 million pounds. Nature's Finest Foods immediately called the USDA to request a recalculation of the Georgia figures as the Georgia Pecan Commission had released data indicating that the State had brought in 95 million pounds.  As the State is under a Federal Marketing Order, that figure was an exact number for all Pecans harvested in orchards of 30 acres or more.  The Georgia Pecan commission operates in much the same manner as the Almond and Walnut Boards.  As such, the USDA should have been using their figures as a start point, not a USDA estimate as in the case of all of the other Pecan producing States.  Further, as the State only tabulates data on the harvests generated by orchards over 30 acres, Nature's Finest Foods petitioned that the actual number should have been somewhere between 100 and 110 million pounds. After several meetings with the Commission, the USDA determined that it was in error. Further, they agreed that they had underestimated the Georgia crop every year since the creation of the Georgia Pecan Commission.  Rather than go back and correct all of the incorrect data, the USDA agreed to issue a correction for the 2009 crop year which it did this past Friday.  Their new estimate placed the Georgia Pecan crop at 100 million pounds, 10 million pounds more than their July figure.  As such, the record 458 million pound consumption figure for 2009 grew ten million pounds to 468,248,000 pounds (inshell basis)

Also this past Friday the USDA released the last of their 2010 Pecan Crop Estimates, and surprisingly, instead of lowering the figure, as most within the industry had expected, the USDA made a slight upward revision to 259.66 million pounds (inshell basis).  Using the revised estimate, the supply situation is shaping up as follows:

2009 Carry-out 91,033,300
2010 US Crop (estimate) 259,660,000
2010 Mexican Imports (estimate) 100,000,000
2010 Total Supply (estimate) 450,690,300
2009 Gross Consumption/Disappearance 468,248,000

Based on the above figures, and assuming that the industry must carry no less than 50 million pounds into the 2011 crop, the industry is short approximately 70 million pounds.  With few alternatives, most buyers have continued to contract what they will need until next fall.  While it is still not known what impact the higher prices will have on the American consumer, even more questions remain relative to what the Chinese will end up purchasing.  During this past fall, their costs increased almost 100%.  Will their customers continue to buy at the higher levels or will they back off in the hope that the 'on-year' crop will bring an increase in supply and a reduction in price?  It will take some time before the industry knows the answer, but in the meantime, prices remain stable, but firm, and supplies of Mammoth, Jr. Mammoth and Jumbo Halves, as well as Large Pieces, remain in very short supply.