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Jul 02, 2020
Article: High price difference between pecan halves and pieces still holds
This article is from our food commodities coverage dated 15/06/20.
High stocks of US pecan pieces have led to a strong price difference between the former and halves, reaching USD1.5 per pound in 2019 and this trend will continue in 2020.
The pecan sales are led by the US processors although Mexico, which will again have a bigger crop than the US, is set to diversify its markets and cut its dependency on the American processors, according to the International Nut and Dried Fruit Council (INC).
The 2020-21 global pecan crop is expected to reach 310,800
in-shell tonnes, 9.2% up year-on-year. The US may total 131,500
in-shell tonnes, 9,000 tonnes up from 2019-20 after suffering the
impact of Hurricane Michael (2018). Mexico is gradually increasing
its output and it is expected to increase by 8.2% to 149,680 tonnes
and exceeding, again, the US production. Finally, South Africa is
expected to total 20,000 in-shell tonnes, 15.8%
more y-o-y.
The US is still focused on recovering its production level prior to Hurricane Michael's damage, selling out its stocks of pieces. Meanwhile, Mexico is experiencing a paradox: it is the main grower, although northern states, the main origins, are focused on exporting in-shell product to US processors rather than taking advantage of the trade conflict between China and the US. As a result, Mexican processors are trying to increase sales to the domestic market, where the consumption is expected to reach around 25,000 shelled tonnes, and to China.
The US and Mexico have doubled their organic crop area, although it is still tiny: around 10,000 acres. However, organic prices have fallen to USD6.5-7.0 in 2019, USD2.0-2.5 less y-o-y, discouraging many farmers from increasing the planted area
South Africa is still a minor origin, and focused on selling in-shell nuts to China. Domestic processors are investing to develop the domestic market, cutting its dependency on falling global prices due to lockdowns, as other nuts are suffering.
This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.
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