Kernel prices strengthen on tight supply 

November 27, 2023

Assessed kernel prices rose in the global pecan market during the week ending on Friday with harvests in parts of Mexico and the U.S. behind schedule, prompting sellers to withdraw from the market or raise offers.

“We’ve slowed down on offering,” a U.S.-based sheller said on November 16. “With the delayed harvest, all of our production is delayed.”

Fancy Jr Mam H strengthened 15 cents to $4.53/lb FOB Texas during the November 18-24 assessment period. The item traded four times from $4.45-$4.64/lb FOB Texas-equivalent and was left offered at lower levels at the close of the period. Choice Jr Mam H traded at a 28-cent discount to the assessed Fancy-grade price.

Trade for pieces was limited. A half-load of Fancy Med Pcs traded at $4.84/lb FOB Texas, though the item was assessed at a lower level. Fancy Sm Pcs traded at $4.49/lb FOB Texas.

Wet weather in parts of Texas, Oklahoma, and Mexico and warm weather in other pecan-growing regions have delayed harvest activities. In Georgia, growers were halfway through harvest, sources said.

The delays have left shellers with a shortage of inshell to shell, which has made them reluctant to offer new crop kernel.

“We will be around 20 or 30 percent shorter than last year,” an inshell broker in Mexico said on Monday. “And the trees are still wet and green, so we’re behind.”

Underscoring the tight supply, U.S. stocks in October fell to lows not seen since 2011, according to the latest USDA Cold Storage report released on Wednesday. U.S. supply stood at 102 million ISE (Inshell Equivalent) lbs in October, down 15% from 120 million lbs last October. Supply typically begins to climb in December.

The price increases in the kernel market came as many shellers learned that they offered too high on a 3.8 million lb tender from a large U.S. supermarket. The supermarket awarded the tender for Fancy Jr Mam H and pieces from $4.50-$4.60/lb FOB Texas – levels that could make it difficult for sellers to extract a margin given current inshell prices, said a U.S. sheller who competed for the business.

“People are setting themselves up for further losses in the future,” the sheller said on Monday. “They want to make sure they have some sales on the books and think they can average the price up during the year. But it’s a pretty risky gamble.”

Inshell market

Buyers in China continued to purchase inshell from Georgia though at a slower pace compared with previous weeks. The window to ship product to the country in time for Chinese New Year has now closed, sources said.  
China has purchased from 25-26 million lbs of inshell from Georgia since its buying spree began in October. Buyers in China have purchased an additional 30 million lbs from Mexico during that period, sources estimate. Sellers in both countries were busy shipping previously purchased containers to China.

The Chinese demand has resulted in a tight supply of sheller-grade inshell in Georgia. Less than 30% of the state’s production this year will be sheller-grade material, an inshell trader in Georgia said.

“Typically, there’s more sheller stock,” the trader said on November 17. “This year, that is not the case. The market for sheller-grade is tight.”

In recent weeks, sheller-grade inshell has been trading from $3.20-$3.30/pt FOB Georgia, sources said. Stratamarkets assessed W Wichita IS, a blend typically purchased by shellers, at $3.15/pt delivered Texas, down 15 cents/pt on the week, based on a trade at that level for Mexico-origin W Schley.

The price fall helped the Fancy Jr Mam H premium to W Wichita rise to $1.38, above its 24-week average but still tight for most shellers.

Meanwhile, Desirable IS and Stuart IS, varieties typically purchased by China, were assessed unchanged on the week due to a lack of new price data.