The Fancy Jr Mam H premium to W Wichita IS narrowed in the global pecan market during the week ending on Friday, underscoring the challenging economics for shellers as kernel demand subsided while inshell demand firmed.

The assessed Fancy Jr Mam H price shed 7 cents as W Wichita IS rose 21 cents during the October 21-27 assessment period. The countervailing move caused the Fancy Jr Mam H premium to W Wichita IS to fall to 97 cents, far below the roughly $1.40 premium most shellers need to make money from converting inshell to kernel.

As a result, many shellers said they would wait for either inshell prices to fall or kernel prices to rise before participating in either market.

“It makes more sense for us to sit on the sidelines,” a U.S.-based sheller said on Friday.

Kernel market

Trade for kernel shipping from the 2023 crop was light during the period.

Buyers in Europe and Asia provided the bulk of the demand. U.S. buyers, who don’t typically begin purchasing until December, showed less interest. However, U.S. buyers were asking shellers to ship an increasing quantity of previously booked shipments, multiple shellers said.

“What I’m seeing is a lot of the people who have contract balances are pulling more than what I would expect to see right now,” a second U.S. sheller said on Thursday.

After trending down for months, Fancy Jr Mam H prices were starting the new crop year at low levels. The average price for the item in October fell to $4.42/lb FOB Texas, down 8 cents from its September average and down 15 cents from its July average. The new crop year in the U.S. and Mexico began this month.

Inshell market

Demand from China for inshell from the U.S. and Mexico remained strong during the period and showed no signs of subsiding.

“They’re still buying, and they’re indicating that they’re going to keep buying after the Chinese New Year,” a U.S.-based inshell trader said on Saturday.

Sales to China of Desirable IS, Stuart IS, and Wichita IS from both the U.S. and Mexico have been from $3.89-$4.05/pt CIF China levels. Freight from Mexico to China was pegged at 17 cents while freight from the U.S. to China was lower.

In Mexico, two large growers who were behind most of the sales to China have since withdrawn from the market, leaving buyers in China looking elsewhere for Mexico-origin inshell, an inshell broker in Mexico said on Tuesday.

“They’re trying to contract from the smaller growers now because they can’t get the volume they need,” the broker said.

China was also buying from Georgia, where growers were harvesting Desirable IS. Harvest activities in Georgia for Stuart IS, another popular variety in China, were running behind.

China has bought an estimated 30 million lbs of inshell from Sonora and from 20-25 million lbs from Georgia, according to informal tallies from traders. Shipments from Mexico to China have been delayed but were expected to ramp up later this week. In Georgia, sellers have begun shipping Desirable IS to China.

Quality from Mexico has been an issue. Meat yields were down to about 56-57% from the normal 58%. Kernel sizes were running smaller. As a result, some of the early contracts booked with China have been renegotiated down by about 50 cents/kg, a U.S.-based inshell trader said.

US supply

The U.S. carried 126 million ISE (Inshell Equivalent) lbs of inventory into the new 2023-2024 year, down 15% from last year’s carry-in, the September Cold Storage Report from the USDA shows. The USDA released the latest report on Wednesday.

The carry-in marks the lowest since 2015. Total U.S. supply was also tracking toward its lowest level in years assuming recent forecasts of the U.S. crop size and imports from Mexico hold.

“That should be enough in and of itself to firm the market,” the second U.S. sheller said.