March Cold Storage Holding the Lowest Since 2012

As several others have pointed out, last week’s release of the March Cold Storage figures only confirms the fact that the industry is dealing with a severe supply shortage. Based on raw numbers, the industry is faced with the lowest inventory since 2012.  Other than one or two processors who seem to have failed Economics 101, it is obvious that current prices do not accurately reflect current supply.  What was an oversupply situation two years ago has quickly turned into a severe shortage of medium, small and midget pieces.  Most major shellers are cutting/breaking halves and large pieces in an attempt to meet increased demand, a process that would have been unthinkable two years ago. The below graph illustrates days of available supply.

                                                              Days of Available Supply

While overall exports are still down 26% over the same period a year ago, the gap has narrowed.  In February, China increased their US pecan imports by 26% taking in almost 10 million pounds of inshell.  I expect the March figures to show similar increases. Imports from Mexico have also increased.  While still down 4.4% year over year, US Shellers increased their imports in an attempt to cover increased demand.

The EU continues to buy hand to mouth; however, with their winter energy needs winding down, and inventory levels continuing to dwindle, buyers will be looking to shore up short positions.  For the two processors who failed Economics 101, increased demand means higher prices.  Quit giving the stuff away!