Buying activity booming in the pecan market, but not on the farm. Insight in the data explains how downward pressure on the pecan producers may be futile with demand increasing even during the economic shutdown.
I’ll be the first to say, we may not have seen the full effects of Covid-19 on the pecan market yet. However with last week’s data release, the pecan market appears to not only be unscathed, but thriving with demand increasing over last year’s record highs.
The American Pecan Council staff released the March pecan position report last week and the data shows an uptick in demand for pecans over last year, and the growth is coming from here in the US. While the trade war with China has reduced exports to China to dismal numbers, the work being done right here at home has been able to keep demand on the uptick. With this good news you would think that pecan prices on the farm would also be on the uptick. While prices are somewhat stable, several growers across the southern region reached out to ask if we had seen a decrease in market activity. Surprised by these comments, we decided to dig into the data to see why with demand and future demand increase, suppliers would be concerned with downward pressure on the market.
When we looked at the data we saw purchases from handlers/shellers had begun to drop off over the past few months, with some of the largest decreases coming in the last two months of February and March seeing a drop of just under 19 million pounds when compared to last year. October and November saw the biggest decreases so far this season with a reduction in pecan purchases of just over 25 million pounds. To date this pecan harvest season has seen a reduction of purchases of just under 39 million pounds, or -13.2% when compared to last year.
So what about inventory. Hander / sheller inventory has also dropped. To date handler inventory has dropped 27.8 million pounds season over season, with the biggest decline coming in recent months. In the last two months of February and March inventory has dropped 94.3 million pounds. Handler were purchasing more early in the season, between September and November purchases were up a total of 47.1 million pounds over last season. With inventory currently at 243 million pounds handlers may be waiting to see the effects of the economic shutdown around the globe. With Europe reporting its worst quarter on record with GDP shrinking 3.5% in the first quarter, with more expected, the next few months will tell if the pecan industry will be negatively affected by the economic shutdown.