China demand strengthens as spot kernel prices decline 

September 25, 2023

Prices for assessed kernel items shipping from the 2022 crop fell in the global pecan market during the week ending on Friday as sellers showed increased interest in clearing inventory ahead of the new crop year in the U.S. and Mexico. 

The price declines came even as demand for spot Q4 shipments rose and trade activity increased. Fancy Jr Mam H and Fancy Mam H traded multiple times during the September 16 to September 22 assessment period.

“I’ve seen a significant uptick in demand,” a U.S. sheller said on Wednesday after booking six containers of Fancy Mam H. “I haven’t written six loads together in months.”

Fancy Jr Mam H was assessed at $4.48/lb FOB Texas, down 2 cents on the week. The item traded at $4.50/lb CIF Europe and $4.75/lb CIF Europe with freight pegged at 15 cents/lb. Multiple offers were left at $4.40-$4.65/lb FOB Texas equivalent levels.

Fancy Mam H trade was more active. Some shellers were holding more inventory of Mammoth Halves compared with the smaller Junior Mammoth Halves. Fancy Mam H traded five times from $4.42-$4.55/lb FOB Texas equivalent levels during the period. After normalizing all trades to FOB Texas, the volume-weighted average of the Fancy Mam H trades was $4.47/lb FOB Texas, a 1-cent discount to the assessed Fancy Jr Mam H price. The item is typically valued at a premium to Fancy Jr Mam H.

Trade for pieces between shellers and end users was limited. Fancy Lge Pcs traded at $4.35/lb FOB Texas prior to the start of the period and was assessed at the same level based on the trade. No trades were reported for Fancy Med Pcs, which was assessed at $4.59/lb FOB Texas, an 11-cent premium to Fancy Jr Mam H. Trade between shellers for pieces was more active. Transactions were reported at 20-49 cent discounts to assessed prices for both Fancy Med Pcs and Fancy Lge Pcs.

In the inshell market, trade for product shipping from the 2022 crop perked on better domestic and overseas demand. 

In multiple transactions, buyers in China purchased 319,000 lbs of Moreland, Creek, and Forkert-variety inshell from $3.27-$3.45/pt FOB Georgia. Meat yields were from 49%-55% and nut count per lb from 45-50 for those transactions. 

Meanwhile, U.S. buyers purchased smaller size Caddo and Elliott inshell at $3.10/pt FOB Georgia. Meat yields were from 53%-55% and nut count per pound from 68-70 for those transactions. Stratamarkets assessed all inshell items shipping from the 2022 crop at lower levels based on the trade activity, with W Wichita IS showing the sharpest loss. 

New crop trade

In addition to purchasing 2022 crop inshell, buyers in China were booking volumes of inshell from the U.S. and Mexico that will ship from the 2023 crop. “China is hungry,” said a U.S. sheller on Friday who was in the middle of negotiations with buyers in China. “I did not expect them to be this aggressive.”

Sources said about 1 million lbs of inshell mainly from Georgia has been sold to China at $3.60/pt in recent days. It wasn’t clear if the price referenced delivered China or FOB U.S. terms.

Buyers in China were also in negotiations to purchase Wichita IS from Sonora, Mexico. Bids from China for Wichita IS with a 58% meat yield and 45-54 nuts/lb were at $3.91/pt CIF China for October shipment.

China buyers were bidding smaller size Wichita IS from Sonora at $3.67/pt CIF China. Sellers remained at higher levels, but trades were expected to close soon, an inshell trader involved in the negotiations said on Thursday. Mexico can sell to China at higher levels compared with the U.S. due to its tariff advantage.

Depleting inshell inventories in China were driving demand from the country. Sources said China bought less inshell than it wanted from South Africa earlier this year due to a shorter crop from South Africa.

The recent demand from China could help bolster prices for both inshell and kernel and put sellers on a stronger footing at the start of the 2023 crop. However, the extent of that price support will depend on how long the demand from China lasts and if it extends into 2024.

New crop Fancy Jr Mam H traded in a wide range from $4.40-$4.90/lb FOB Texas equivalent prices. After normalizing all trades to FOB Texas levels, the volume-weighted average of the reported trades was $4.69/lb FOB Texas, a 21-cent premium to the assessed 2022 crop Fancy Jr Mam H price.