North America is the largest pecan market in the world, producing some 80% of the world’s supply and consuming a large portion of that supply as well. The United States has been the driver of growth this year with domestic consumption continuing to out pace last year pushing consumption into the positive territory even as exports continue to slump for the year.
The global economy has been a rollercoaster in 2020 with a pandemic continuing to keep certain sectors of the economy closed or at a reduced capacity. Businesses are sharpening their pencils and looking for any potential cutbacks if the need may arise.
While the pecan industry has fared well through the pandemic and an election year with consumption continuing to rise, first handlers have pulled back on purchases leaving growers with inventory scratching their heads wondering why.
Pecan inventories are rising around the globe and some think a slow down is looming. South Africa is in the later stages of harvest and reports are coming back that China has been slower to purchase this year and has shown less interest.
Shipments to China from the US have picked up slightly in the past few months, however shipments to China are still quite low for the year at around 20 million pounds shipped to China so far this season.
The overall purchases both foreign and domestic are down as well. First handlers in the US have reported purchasing just over 300 million pounds this year when last year at this same time first handlers had purchased about 33 million pounds more by now, a decrease of 9.7% year to date. Domestic purchases are down 4.6% and foreign purchases are down 21.4% year to date.
Growers moved about 6 million pounds of Western Schley to first handlers in June but prices have also fallen quite significantly with growers reporting sales as low as 1.60 up to 1.75 significantly lower than last year.
While pecan shipments as well as future commitments to ship continue to rise, the slow down in purchases could indicate that many sellers are not interested in getting caught with excess inventory. For now the numbers look positive with steady growth on the demand side of the equation, however a slow down in purchases and a rise in inventory could mean that shipments need more growth before on the farm prices will rebound.