USDA Releases Final 2021 Crop Figure

Like the weather, things often change overnight in the pecan industry. Back in January it appeared that the industry’s carryout would be the smallest in ten years.  Consumption was running relatively close to 2021 levels, imports were running ahead of prior year levels and the industry was looking at the first opportunity in three years to make some money.  However, inflation, poor crop reporting out of Mexico, higher prices and the continued logistics issues quickly changed that.  Based on the Cold Storage holdings reported over the last three months, FAS export data and Customs import information, consumption has definitely hit a wall. 

On May 4^th, the USDA released the final crop figures for the 2021 US Crop.  With only one exception, there were no surprises in their report. The one exception, New Mexico production.  Most within the industry projected that New Mexico would produce somewhere between 90 and 100 million pounds.  The USDA placed the final figure at 78.7 million.  Regardless, based on both grower and sheller surveys, the US crop was tabulated at 255.3 million pounds (inshell basis), only slightly smaller than their October 258 million-pound forecast.  As data is only collected for the five largest producing states, which account for approximately 90% of all US production, the US crop was actually closer to 281 million pounds but still well below 2020 levels.  Due to the shorter than expected crop, and the loss of two major US processors, prices rose dramatically.  Based on USDA data, the average price paid to US growers for improved varieties was $2.20/lb, a 51.7% increase over the previous year.  For natives, the price rose from $0.80/lb in 2020 to $1.43/lb.

The biggest changes occurred in what was anticipated to come from Mexico.  COMNUEZ had forecast a 224-million-pound crop, well below the 362 million pounds produced a year earlier.  However, based on US Customs import figures, the crop was considerably larger.  Over the past ten years, the US has either marketed or processed almost 78% of the Mexican crop.  As of May 16, 2022, Mexico has shipped over 196 million pounds into the US.  Assuming that the 78% figure holds true, that means that the Mexican crop was actually closer to 300 million pounds (the Mexican Government still has not published a final crop figure).  It is that figure that dramatically changes what the industry will probably carry into the 2022 crop year.  Based on the earlier figures, it looked as if the industry would carry out approximately 120 million pounds.  Based on the revised data, as well as the significant reduction in exports to China (down 61.3% from 2021 levels), the number is now closer to 167 million pounds (down from 173.4 million pounds in 2021).

Then there is inflation, a lack of adequate shelling capacity and the continuing logistics problems.  Fertilizer is up over 400%, fuel over 70%, a lack of containers, shipping delays, etc.  Unless both the US and Mexico have significantly larger crops, supply issues, combined with increasing costs, will keep prices high.  As such, buyers should expect to see a continued firming in market prices and a narrowing of prices between that of pieces and halves. Availability will again be the determining factor in most sales and their associated prices.