While Consumption Continues to Increase, January Cold Storage Holdings Jump Unexpectedly

February 26, 2020

Contrary to what was published last week by a less than reputable blogger, based on recently released USDA FAS data, and currently available crop information, both US pecan exports and US Domestic Consumption continue to rise.  According to the December FAS data, overall pecan exports are up 13% over the same period a year ago.  Kernel exports are up 6.1%, inshell exports up almost 30%.  Inshell exports to China, even with the higher tariffs, are up over 550%.  To date, exports to China in the first five months of the 2019 crop year have almost matched all of 2018’s shipments. Domestically, if current crop estimates are accurate, consumption is up a little more than 1%.  What is most encouraging is the increase in the price for pieces.  While the differential between the price of halves and pieces is still considerably higher than historical norms, over the past several months the difference has continued to decrease as the supply of cheap pieces remaining from the 2018 crop gets absorbed by the market.

Imports from Mexico have also started to slow.  Based on crossings as of February 20, 2020, Mexican imports, for the first time in over a year, are slightly less than the same period one year ago.  On February 20, 2019, Mexican imports were at a record 197.4 million pounds. This year they stood at 196.9 million pounds.

As for overseas production, both Australia and South Africa are reporting weather related issues with their 2020 corps. 

In Australia, while the wildfires have had no impact on the crop, the weather that spawned the fires has.  Severe drought and high temperatures have the anticipated ‘off-year’ crop a little smaller than originally forecast.  Current projections are for a crop of approximately 4.8 million pounds, down from 7 million pounds a year ago.

In South Africa, where early projections had forecast a crop of well over 50 million pounds, recent hail and high winds have lowered projections to approximately 48.5 million pounds, up from last year’s 38 million pounds.  While the bulk of the South African crop generally ships to China, coronavirus fears have raised a lot of questions as to when that might happen this year and at what price.  To make matters worse, South Africa’s largest cooperative is still holding a significant amount of unsold kernels from last year’s crop which continues to depress the overall market.  

Finally, Monday’s release of the January Cold Storage Holdings was not as encouraging as had been hoped.  Supplies being held in cold storage jumped unexpectedly erasing all of last month’s gains.  Unfortunately, as has been the case the past several months, the American Pecan Council still has not figured out how to publish its monthly data in a timely manner making analysis of the Cold Storage data difficult.  Last year, at the end of January, the industry had 256.9 million pounds in cold storage.  This year that figure is 256.6 million pounds.  Unfortunately, that is an increase of 76.6 million pounds in one month.  Last year, the increase was only 53.6 million pounds.  While much of the increase can be attributed to the late harvest, it would certainly be nice to know how much of that increase is committed.