Bullish Pecan Prices Expected to Continue

Pecan prices

Pecan growers around the globe have seen great returns from their pecan crops season after season for many years now, and as season after season comes and goes many growers, and buyers alike wonder how long these prices will continue. Back in 2008 and 2009 when the economy started to slow, many people took notice, that while most of the businesses in their area were making drastic cut backs and tightening budgets across the board, pecan growers, pecan sheller’s, and pecan accumulators, were doing the exact opposite. Pecan growers were beginning to seek out new land to plant new orchards at a breakneck pace, pecan shelling plants were expanding shelling capacities, putting in onsite cold storage, and everybody was investing in new untapped markets. The most interesting part of this to me is that by in large, this is still happening 10 years later, and with no end in sight. Pecan prices like other commodity prices are driven by supply and demand, and that is why pecan prices have continuously inched upward. The demand for pecans largely outweighs the supply. This is due in large part to the amount of time it takes to bring pecans into production. Pecans take a good 8 years to come into production, meaning that once the tree(s) are planted, the producer waits on average 8 years to harvest any sizable crop off of his or her orchard. This is vastly different from an annually planted and harvested commodity such as cotton, peanuts, or corn (maize), in 2 ways. First when prices (demand) increases, it takes an average of 8 years to increase supply. Second, and most significant is the barrier to entry; the cost to either clear land for a new orchard, or take other crop land out of production is very costly. The initial cost to establish the orchard is present, but the real cost remains in the yearly input to get the orchard to production year after year for eight years. To date the demand still outweighs the supply, the USA pecan industry has done a great job in the last few years developing new markets overseas, and has recently established a Federal Marketing Order which will allow for more marketing funds and activities. The price of pecans, like any commodity, depends on supply and demand, and currently the USA pecan growers are making sure the demand out paces supply.