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Kernel prices firm on improved demand  

February 2, 2024

The assessed Fancy Jr Mam H price rose 9 cents to $4.53/lb FOB Texas in the global pecan market during the week ending on Friday as a newly-released USDA tender brought in more buyers. 

Fancy Jr Mam H traded three times during the Jan. 27-Feb. 2 assessment period, with the trades ranging from $4.50-$4.60/lb FOB Texas-equivalent. The item was assessed at $4.53/lb FOB Texas based on the average of those trades.

Activity on pieces was thin. Fancy Med Pcs fell 4 cents to $4.49/lb FOB Texas based on the most competitive offer at $4.50/lb FOB Texas. There was also a $4.85/lb FOB Texas trade of a mixed load containing Fancy Jr Mam H Fancy Med Pcs.  

The assessed Fancy Lge Pcs rose by 11 cents to $4.51/lb FOB Texas based on a four-week spread with the Fancy Jr Mam H.  

USDA demand: The USDA will purchase 6.2 million lbs of large and extra-large pieces for April to August shipment through a new Section 32 purchase program announced on Tuesday.  

The request for proposal will be open to companies that process U.S.-grown pecans in a USDA-approved facility. The purchase could help move about 2% to 3% of the current supply off the market, said sources.  

The quick turnaround on the shipment periods means that U.S. shellers could be delivering about 30 truckloads a day for five months. Getting rid of that material will help ease shellers’ storage and loan interest woes, and could raise prices on the remaining market supply, according to sources.   

What they’re saying: “I have already seen the USDA tender affect the market,” said one U.S. broker on Friday. “Medium pieces prices are going for higher, and buyers are asking around more. It will push buyers to go ahead and make a decision either way.” 

“It’s going to further stimulate an already stimulated market,” a U.S. sheller said on Thursday.  

“The more pecans we displace will leave a void, and hopefully, that will put upward pressure on the price back to the grower,” said a U.S. grower on Wednesday.

“It will be interesting to see what happens because the market is short, and even with a short supply, the market is still depressed,” said a second U.S. sheller on Wednesday. “I’m not sure how we’re going to fill the requirements.”    

Other Developments: A large sheller has defaulted on several deals, sending its customers back to the market to find companies that can supply their unfulfilled contracts, multiple sources said. That has driven prices up for kernels.  

“We’ve seen a lot of his sales contracts come back onto the market,” said a third U.S. sheller on Thursday. “It’s all stuff that he has defaulted on, all contracts that he wasn’t delivering.” 

Inshell: W Wichita fell 6 cents/pt as shellers held off on buying more supply while they waited to see if kernel prices would rise enough to cover their costs. As of this week, the W Wichita to Fancy Jr Mam H premium hit $1.28/lb, still well below the $1.50/lb many shellers consider the sweet spot to cover production expenses. Meanwhile, growers are also hoping for higher prices for their inshell.   

“Inshell seems to be slowing down due to growers sitting on it waiting for higher prices,” one Mexican sheller said on Thursday. “Mexico’s small and medium-sized growers have already sold their crop, and the big growers are waiting for higher prices.”  

South Africa: Growers have booked their first contracts from their upcoming 2024 harvest, with initial sales for Wichita 58% 110-130 count/kg at $5.60/kg CIF Ningbo and $5.40/kg Ningbo. European buyers are continuing to ask South African sellers for prompt spot deals on kernels, but the country is sold out of its 2023 stock and focusing on booking its new crop longer-term.  

“The local market in South Africa will also run out of stock in the next month or two waiting for the new season,” said one South African grower on Friday. “Several South African factories offered a few containers as part of a risk management plan.” 

Estimates for this year’s South African crop are currently in the range of 27,000 tons to 35,000 tons, according to sources. By comparison, the country’s 2023 crop was 22,000 tons, while the 2022 crop was 32,000 tons.