Pecan Exports Continue to Out-pace 2019 Levels While the Industry Wrestles With Supply Issues

June 23, 2020

For those who might have missed it, the USDA NASS published the Noncitrus Fruits and Nuts 2019 Final Summary back on May 5, 2020. Historically, the crop final was published in July; however, to bring the report more into line with current planting and harvesting schedules, they published the report in June last year and moved it to May this year.  Speaking with the USDA, future summary reports will continue to be published in May.  Based on their survey of US Pecan Growers, the final 2019 crop came in at 255.6 million pounds (inshell basis for the five largest producing States).  That would put the actual size of the crop somewhere around 300 million pounds.  It will be interesting to compare that figure with the APC final number due out in September.

Yesterday the USDA released the May Cold Storage figures. While inventory levels remain at historically high levels (the highest May inventory ever), the differential between last year’s inventory and this year’s, continues to decline shrinking from 32.4 million pounds in March to 27.2 million in April and 24.7 in May.  This trend is confirmed by USDA FAS export data which indicates that pecan exports are up 14.8% over the same period last year.  Kernel exports are up 2.8% while inshell exports are up 37.6% primarily due to a 287% increase in shipments to China.

The only downturn appears to be US Domestic consumption.  At the moment, based on currently available information, consumption has slipped approximately 2.1%.  Part of this may be due to the decline in sales in the food service segment of the industry as a result of COVID-19 small business-related closings.  It will be interesting to see how long it takes that segment of the economy to recover now that numerous States are starting to reopen.

Record imports from Mexico continue to depress the kernel market.  As of June 4, 2020, Mexico had shipped over 264 million pounds of pecans to the US, an increase of 2% over last year’s record.  Piece prices continue to be the primary reason for the market’s weakness.

Based on recent reports from South Africa, it would appear that they will harvest a record crop of approximately 21,000 metric tons (46.3 million pounds). Due to inventory issues in China, export sales have been lagging behind 2019 shipments.  As a result, prices have been less than what had been expected.

Finally, the continued weakness in pecan prices has resulted in ADM’s decision to sell all of their pecan and peanut assets in South Africa.  The sale was concluded late last month leaving ADM’s Texas pecan shelling operation as their sole remaining investment in the Pecan Industry.  When one looks at what ADM invested in the industry just five short years ago, and the amount of money it has lost since then, the loss of investment capital and purchasing power due to the resultant resizing does not bode well for the industry.  Add last week’s reported bankruptcy filing of one of Mexico’s long-term mid-sized sheller’s, and the need for the establishment of the proposed Pecan Promotion and Research Program becomes even more urgent. The proposed program, aimed at raising revenue from imported pecans, will go a long way in financing the industry’s marketing efforts, and in the long term, reversing current pricing trends. For many Sheller’s and Growers, it can’t come soon enough.  For others, it still may be too late.