Tri-State Growers Release First 2015 Pecan Crop Estimate

June 23, 2015

The Tri-State Growers (Arkansas, Louisiana and Mississippi) concluded their annual meeting this past Friday with the first crop estimate of the season.  While the crop is projected to be larger than the 2014 crop, 283 million pounds vs 265 million pounds, total supply will be lower.  Looking over the figures for each state, many within the industry believe that the 80 million pound figure for Georgia is anywhere from twenty to forty million pounds too low.  However, it is also felt that the projected crops for Oklahoma and Alabama may not materialize.  As such, the overall estimate may not be too far out of line.

While exports continue to lead the consumption surge, recent arrests in China have put a damper on additional shipments to the region.  What was initially thought to be an isolated crackdown has turned out to be more widespread.  As such, buyers are laying low until the crackdown has run its course.  Further, those that are buying have lowered their offers figuring that they are now going to have to pay the required customs and VAT taxes and do not want to have to raise their prices to their customers. In the meantime, sellers are concerned about in-transit product that has being held by the Government. Will it be allowed to enter the Chinese economy or sent back to the US and Mexico?  So far very little of the product has been sent back as those holding the product have been negotiating to pay the past-due customs and VAT taxes to insure that the product is available to satisfy in-country demand.

With respect to imports from Mexico, through June 10th, 184 million pounds of pecans (inshell basis) has crossed the border setting a new record.  With more than a month to go in this export/import year, that figure could easily top 190 million pounds.  Even when US inshell exports to Mexico are subtracted from this figure, the total is still record.  Based on estimated Mexican shipments to China, and taking into consideration pecans consumed in Mexico, the 2014 Mexican crop was probably the largest in their history; over 230 million pounds.  While there have been some early 2015 Mexican crop figures floated around in the 240 to 250 million pound range, Mexico would be hard pressed to surpass the crop production of the past two years. While anything is possible, and based on several conversations with growers south of the border, I would not expect a crop any larger than last year’s.

South Africa is also experiencing some problems.  The crop is coming in later than anticipated with only 20 to 25% in the barn.  Based on current yields, it would now appear that the crop will be about the same size as last year.  Further, due to smaller than expected counts-per-pound, and the problems in China, prices have slowly moved lower.  While 90% or more of the crop is still expected to go to China, that process may take a little longer which could impact early pricing in the US.

Finally, yesterday’s release of the May Cold Storage holdings continues to show record consumption.  Based on current figures, the industry should expect to enter the fall with little or no inshell in stock and already short supplies of Mammoth, Jr Mammoth and Jumbo Halves, as well as Extra Large, Large and Medium Pieces will not get any better. Based on current inventory figures, current pricing levels for the larger halves may not move much higher.  However, piece prices should continue to move higher as they slowly return to more traditional halve/piece pricing differentials.

As usual, should you have any questions, please do not hesitate to contact me at 630-879-5200.