November Cold Storage Holdings Finally Drop Below Prior Year Levels
December 24, 2019
For what has certainly been a year for the record books, yesterday’s Cold Storage figures were certainly encouraging. For the first time since April 2018, there are less pecans in inventory than there were in the prior year. Yes, the harvest started late and shipments of Mexican inshell are down 37% from the same period a year ago. However, when one considers that since November 2018 the industry has reduced the inventory surplus by approximately 37 million pounds, there can be no doubt that consumption is headed in the right direction. Further, with the announced resolution of the US-China trade dispute, prices have finally started to turn around. While it is still too early to determine the impact China could have on the inshell market, especially since the prime shipping season has passed, China entered the year with very low inventories of high quality inshell. When one considers that the US exported over 80 million pounds to China in 2017, it is not unreasonable to anticipate that 2020 shipments could be north of 40 million pounds and this in a year when both US and Mexican production are expected to be lower than originally forecast.
Having said that, no one should expect to see pre-2017 prices anytime soon. There is still a significant oversupply of pieces that need to be moved as evidenced by Mexican kernel shipments to the US; up 17.6% over last year’s record, and a pricing differential between halves and pieces still well over $1.00/lb. With the harvest still a long way from complete in the west, and no November shipment data yet from the American Pecan Council, both sheller’s and grower’s should take a deep breath, carefully evaluate their positions and then consider how best to take advantage of current market conditions. Pecans are currently one of the best buys in the nut market basket, an opportunity advantage that the industry could benefit from well into next Fall. As such, now is the time to take advantage of the piece oversupply, seek new product development opportunities, long term increases in market share and the stabilization of prices at levels beneficial to all segments of our industry all of which would serve the industry well going forward.