US Cold Storage Levels Hit 30-Year Low

January 28, 2022

This past Monday, the USDA released the December Cold Storage holdings.  While the figure showed a lower-than-expected inventory position, it should not have come as a surprise. For months, the industry has known that both the US and Mexican crops were considerably smaller. Due to milder than expected weather patterns, the harvest started much later than normal, and consumption last year set a record; all contributing to lower inventory positions.  Further, the September, October and November holdings each showed significant drops over the same period a year ago.  In October, there was 24 million pounds less, in November, it was 53 million pounds less and, as of December 30th, the industry has 87 million pounds less than the same period a year ago.  Based on the USDA crop estimate, it was projected that the industry could be as short 226 million pounds, a projected shortage greater than the projected 2021 Mexican crop.  As such, the figure should not have been a surprise. What is a surprise is the fact that the industry continues to sell pieces well below their cost. 

Due to the smaller US and Mexican crops, the overall market remains relatively firm, although it would appear to have stabilized over the past few weeks.  Because of the late harvest, especially in the southeastern growing region, US growers missed the bulk of the Chinese New Year’s market thereby resulting in the reduction of overall US inshell exports by 54% over the same period a year ago. While, on the surface, this was not a good development, since the beginning of the trade war with China, the industry has come to realize how unreliable China is as a trading partner, and as such, has found new markets for that product.  With this year’s supply shortages, that additional tonnage will definitely find homes elsewhere. On a positive note, while inshell exports were down, kernel exports rose 31%.

Due to severe drought conditions in Mexico, production dropped from 362.2 million pounds to approximately 224 million pounds.  As a result, inshell shipments to China were down 15% from last year and down 50% from their high in 2019.  Between September and November, Mexico only shipped 17 million pounds to China.  During the same period, total US inshell exports were only 16.6 million pounds. The big question: how severely stressed are the trees?  Can Mexico come back with a big crop in 2022 or will the next big crop be 2023?

As for the kernel market, prices for Fancy Jr Mammoth Halves have climbed to levels not seen since 2017. Piece prices have also climbed, but as stated above, are still being sold at a loss. However, for the first time in over three years, the industry is short of pieces; all sizes of pieces.  On the bright side, overall quality in both the US and Mexico is very good. 

Finally, as many of you have pointed out, for the past six months my website has not been functioning.  Unfortunately, it was hacked last summer and could not be repaired.  A rebuild was required.  I am happy to announce that as of today, it is back up and running. ?