November 24, 2015
USDA cold storage carryout for October 31, 2015 was reported yesterday with shelled kernels coming in at 36.1 million and inshell coming in at 20.0 million pounds. This compares to October 31, 2014 with shelled kernels coming in at 43.0 million and inshell coming in at 27.1 million. As an industry, we always convert back to an inshell basis and the industry conversion on the kernel pounds is at 44% which represents historical average kernel percentages of all varieties and regions of pecans. The official October 31 carryout position converted on an inshell basis is 102 million inshell pounds compared to 124.9 million in the prior year. The carryout of 102 million inshell pounds is much greater than the predicted 70 million inshell pound carryout and is indicative of a slower harvest, less movement to China in October than normal, fewer pieces in the industry causing a delay in shipment and inventory holding by growers in anticipation and preparation of shipments to China in November and December. Young Pecan always uses an October position as October is a very large shipping month and very little harvest actually takes place during the month; so when looking at the lowest possible point of carry-in of the prior year's supply, October would be that month. Back in early October, USDA predicted a 2015/16 crop size of 272 million inshell pounds. This estimate was much lower than most grower and sheller groups were predicting, with most groups predicting closer to 320 million pounds in the US. Mexico, up to this point, has been predicting a very good crop but more recently some are suggesting the Mexican crop may be somewhat smaller due to heavy rains and hail that has been seen not only in Mexico but in the western US states as well.
Listed below is a supply/consumption chart reflecting the latest information received.
|USDA Cold Storage|
|US Crop per USDA||202||302||294||270||367||266||264||272|
|Net Imports MX||80||120||128||100||152||130||150||165***|
***Estimated Mexican Imports to the US
Today, we are unsure what impact China will have on this crop. To date, they have had less interest and the Chinese New Year is much earlier than last year. But China is unpredictable, and just like last year when we did not expect their return in January, there is no way to know what their desire for pecans will be as we move through this harvest. Below is a chart that shows the exports to China on a crop year basis (October-September) for the past 10 crop years.
After two short crops in a row (2013 and 2014), and with good general growing conditions throughout the spring and summer, everyone was expecting this to be the on-year cycle. The southeastern states have been harvesting basically since the first of the month and we are hearing of quality issues primarily in Georgia but throughout the entire southeast. The native/seedling crops are just beginning harvest and the western US will not begin to harvest until early December. There is concern in the western US that the El Nino rains may set in right at the time of harvest which could delay western growers' ability to harvest in a timely manner and could cause quality issues if nuts lay on the ground in rainy conditions. So at this point, we have no choice but to believe that USDA could be correct in their assessment of another short crop.
Looking at the estimated total supply for the 2015/16 crop, it appears to be very similar to that of 2014/15. However, with more of the 2014/15 crop moving to China (close to 20MM) than the prior year, the shelling industry had far less pecans to shell during 2015 causing a huge shortage of supply especially in pecan pieces. The quality of the 2014 crop was very good and with improved processes, the shelling industry also realized a higher shellout percentage of pecan halves to pieces than in past years further creating a shortage of pecan pieces. So for the months of late October, November and early December, inshell purchased has and will be used to cover 2015 fourth quarter demand leaving a much smaller inshell supply to service the 2015/16 business.
We will continue to keep you informed as the crop continues to harvest. While USDA did reinstate the October estimate for the 2015/16 crop, we are not expecting another projection from USDA until well into 2016 with the final number being reported in July of 2016.
If you have any questions or wish to discuss these estimates further, please give us a call at 843-319-5605 or 800-469-6607.
Vice President Sales
Young Pecan/NP Young, LLC
November 2015 is listed below:
June 2015 report is listed below.
July 2015 report is listed below.
September 2015 report is listed below