With pecan inventory higher than last year and China slow to enter the market, the pecan market in North America has opened weak and prices continue to soften as handlers and shellers are reluctant to make any strong offers.
The American Pecan Council released the latest report for August and with it the final report for the 2019-20 season. The pecan season is reported each year from September to August in keeping with the harvest and delivery of the pecan crop. The latest report showed strong demand for the year outpacing last season by 6.7% to finish the year with approximately 339,123,535 (c2i) pounds delivered to end users.
The pecan inventory reported by handlers was also up. Shelled meats fell slightly, down 5%, while in-shell inventory rose by 60% when compared to August of last year. By ending the season with a larger inventory, handlers and shellers also enter the new season with a larger inventory. This year US handlers carry in just over 208 million pounds according to the report.
With a larger carry in, handlers and shellers can wait longer to enter the market, possibly allowing for a better price position as many growers in the southern US either won’t or don’t want to store pecans to sell at a later date. Storing pecans can be risky without a forward contract in place, and as of now few contracts are being offered.
The commitments to ship are a bright spot in the data. Commitments to ship, represents orders not yet filled by handlers to be shipped in the future. As of the August report, future commitments are up significantly with both in-shell and shelled commitments up more than 60% over last year.
As growers plant more pecans in an effort to keep up with surging demand, more producers will need to consider storing pecans for later deliveries in the season. With so many growers still operating on a spot price market, handlers and shellers are required to take massive financial risk when speculating on future deliveries leaving them to make low ball offers in the event the market turns south while holding non committed inventory.
c2i – Converted to In-shell – When converting shelled to in-shell we use the industry standard 50% meat to shell conversion rate.
