USDA Revises January Cold Storage Holdings/Consumption Continues to be Strong
March 23, 2016
The release of the February Cold Storage Holdings contained a lot of good news for the industry. First, the January figures were revised downward approximately 8 million pounds (inshell basis). Based on conversations with the USDA, one Sheller incorrectly submitted shelled meat data for inshell holdings and inshell data for shelled meat data for the January report and didn’t find the error until they were submitting their February data. The result of the change means that consumption in January was greater than originally thought and in line with earlier projections. Second, the increase in cold storage holdings, while greater than February 2015 levels, is in line with inventory increases in 2012, 2013 and 2014. When one considers the fact that the industry carried in 50 million pounds less product than a year ago and that Mexican imports are running slightly ahead of last year, it would appear to indicate that the 2015 US Crop is not smaller than what the USDA forecast back in October. As such, while supplies will continue to be tight, there should be enough pecans to handle projected demand.
With respect to the Mexican crop, based on government data, the 2015 crop was approximately 258 million pounds, down from last year’s record crop of 271 million pounds (inshell basis). However, even with the smaller crop, imports are running slightly ahead of last year due in part to reduced shipments to China and the high prices being paid by US Shellers as they try to offset US crop shortages.
US Exports continue to be a tale of two commodities. While overall US worldwide pecan exports are down approximately 8%, meat shipments are up 3.5%. China is the primary reason for the overall decline with inshell shipments off 28% from a year ago. However, as mentioned last month, meat shipments to China continue to increase; up approximately 37% from a year ago.
Finally, it won’t be long before we know if the growers will approve the proposed Federal Marketing Order. Voting runs until the end of the month, and while many within the industry feel that the proposal will be approved, just like the upcoming Presidential election, it all boils down to ‘voter’ turnout. This is one of the most important initiatives ever presented to the industry and one that is critical to its future. Hopefully the growers will do a better job of submitting their ballots this time than they did when asked to submit their crop estimate a few months back.
As usual, should you have any questions, please do not hesitate to contact me at 630-879-5200.