Things Aren't As Bad as the March Cold Storage Figures Might Indicate

April 28, 2020

Since the USDA’s release of the March Cold Storage Holdings, I have received numerous inquiries relative to the amount of product in inventory and the possible impact on pricing. Contrary to what one ‘less-than-reputable’ blogger has reported, there is no Sheller/Broker conspiracy to push prices lower. While the number is higher than usual, it is not unheard of.  In fact, data collected to date is following very closely with the same period in 2013.













NOTE: All meats are converted using the APC meat to inshell conversion rate of 50%.  While not reported as such by the USDA (Congress did not approve funds for a final crop figure), the 2012 crop was one of the largest in history.

Last month I listed four possible reasons for the increase.  I have re-listed three of them here. Based on recent conversations with the American Pecan Council and USDA, at least two have been confirmed as contributing to the increase.

  1. Anticipating that the US/China tariff issue would be resolved, several growers put their product in cold storage hoping to get higher prices later in the year, either from China or from shellers who needed additional product.  By law, product held by growers is not required to be reported to the American Pecan Council.  By some estimates, product being held by US Growers is somewhere between 25 and 35 million pounds.
  2. At least two major Mexican shellers have increased their storage capabilities in the US.  Based on recent conversations with the USDA and the APC, at least one of the large Mexican Shellers is now reporting part of their holdings to the APC.  That means that the rest of their US held inventory is also being reported to the USDA.
  3. The increase in inventory could also mean that both the US and Mexican crops are much larger than originally projected.  Because the USDA only provides estimates for the five largest pecan producing States, the actual crop is 15% to 20% larger. Based on the USDA January preliminary estimate, the 2019 US crop is closer to 300 million pounds.  Mexico’s crop is also larger. As reported in the April 2020 issue of Pecan South, the 2019 Mexican crop was 377 million pounds, between 50 and 100 million pounds more than originally estimated. To date, Mexico has exported over 230 million pounds to the US; a near record.

Even with near record Mexican imports, a continuing trade war with China and a record Mexican crop, meat inventories increased by less than 3 million pounds in March. Consumption is good. Further, ‘commitments to ship’ are also up.  It is time for the industry to meet with the USDA and Department of Commerce to get a better understanding of where the Government is getting their numbers. There should also be a way to share data to ensure that the numbers being published are as accurate as possible. With the possible implementation of a new Promotion and Research program, NOW is the time to do it. There will not be a better opportunity.