The USDA NASS Releases Final 2017 Pecan Crop Figures as World Supply Increases Dramatically

June 27, 2018

Capping a week of data releases and crop estimates, the USDA released their final 2017 crop estimate today estimating US production at 293.85 million pounds (inshell basis). Using that figure, the 2017 US supply worked out as follows:

2017 Carry-In (44% Meat Conv. Rate)                    155,128,580

2017 USDA NASS Final                                               293,850,000

2017 Mexican Imports-Gross (NFF estimate)        225,000,000

2017 Total (estimate)                                                 673,978,580*

*Note: 2016 Total Supply was approximately 642.1 million pounds. Net Mexican Imports through June 25, 2018 were approximately 195 million pounds). 

It should be noted that the final USDA crop estimate only includes production from the eight largest producing states.  Based on industry estimates, the crop was at least 12 million pounds larger.

NASS was not the only agency releasing crop figures this week. Based on the latest Cold Storage Holdings, both US domestic consumption and exports have increased.  While the final figures will not be available until September, based on currently available data, US consumption has increased from 268.3 million pounds to 290.5 million, an 8.3% increase. Through April, exports are up 7.7%.

As has been pointed out in several of my recent newsletters, not only was the US crop greater than originally forecast, so was the Mexican crop.  Early reports were for a Mexican crop 20 to 40% smaller than the 2016 record crop.  However, based on this week’s release by the Mexican Agriculture Information Service, for the fourth year in a row, Mexico out-produced the US with a crop of 322 million pounds.  As was the case last year, over two-thirds of that production was exported to the US.  Through June 25th, Mexico had shipped 214.5 million pounds to the US.  On a net basis, that equates to approximately 195 million pounds.  With another month to go before the end of the FAS export year, that figure could climb another 10 million pounds.  It was also announced that the 2018 crop is estimated to be 358,245,446 lbs; another record.

Many growers continue to express concerns about the recent tariffs on US pecans headed to China.  While they could have an impact later this year, they have had little or no impact to date.  Through April, inshell exports to China are up 5.5%.  Further, US shipments are historically slow during this period as Chinese traders focus on the South African harvest.  The combination of a record South African crop, a larger than anticipated inventory of pecans currently sitting in China and weaker prices due to increased supplies, US Growers may not see a lot of interest from China until much later this summer or early fall.

With Mexico and South Africa both projecting record crops, worldwide supply shapes-up as follows:

2018 Carry-In (estimate)                                        151,000,000

2018 US Crop (Tri-State Grower estimate)         300,000,000

2018 Mexican Crop (estimate)                              358,245,446

2018 South African Crop (estimate)                     48,501,200

2018 Australian Crop (estimate)                             5,511,500

Total                                                                        863,258,146*

*Note: 2017 Total World Supply (excluding China and South America) was approximately 815.3 million pounds.

As has been stated many times before, the remedy for high prices is ‘high prices.’  Due to the artificially high inshell prices of the past two years, the market has been poised for a correction. It was just a matter of time.  However, having said that, right now the industry should be more concerned about what happens in the next few years. While lower prices will help to spur consumption, it will not solve the problems facing our industry. Yes, the marketing order is giving us the tools we need to increase demand, but that won’t happen overnight. The industry needs to immediately engage in a frank and honest discussion about projected production increases in Mexico, South Africa, China and South America, cheaper labor and production costs in the aforementioned countries and their impact on the ability of the US Pecan Industry to continue to be competitive, the impact of cheap pecan kernels coming to the US from Mexico and the use of growth hormones in the orchards of every pecan producing country but the US.  Time is not on our side, and a failure to respond with an innovative and decisive plan will eventually lead to significantly lower returns and a loss of market share.  If you don’t think it can happen, just ask any of the remaining US Shellers about China and 2007.