Kernel prices inch higher as supply tightens

March 11, 2024

Assessed kernel prices edged up in the global pecan market during the week ending on Friday in limited trade as sheller demand increased and supply remained tight.  

Driving the moves: Supply of uncommitted kernel is dwindling given that not enough meats were cracked out earlier in the year to support long-term contract sales. While current demand from end users is tepid across the globe, many shellers are scouring the market for pieces and halves from other shellers as they work to cover contracts with end users inked earlier.  

What they’re saying: “There is not a lot of anything left out there,” one U.S. sheller said on Thursday, referring to kernels. “Some shellers are going to have a hard time finding what they need.” 

“We are dealing with a very slow time of the year in a market that is really lackluster,” the sheller said. “A lot of it has to do with consumer uncertainty.” 

Go deeper: Fancy Jr Mam H rose 6 cents to $4.58/lb FOB Texas during the March 2-8 assessment period. Sales of the item, which were already slow in the previous week, remained thin. The item traded at $4.70/lb FOB Texas and 4.55/lb CFR Europe.  

Fancy Mam H traded at $4.70/lb CFR Rotterdam. Stratamarkets assessed the item at $4.60/lb FOB Texas, up 8 cents and bringing it to a 2-cent premium to the Fancy Jr Mam H.   

Trade for pieces was also limited. Fancy Lge Pcs traded at $4.55/lb CNF Hamburg and was assessed at $4.45/lb FOB Texas based on the trade, up a penny. Fancy Mdg Pcs traded at $4.15/lb FOB Texas.  

No trades were reported for Fancy Sm Pcs or Fancy Med Pcs. Stratamarkets assessed the latter at $4.60/lb FOB Texas based on its prior four-week average premium to Fancy Jr Mam H. 

The on-week price increase could be short-lived if global end user demand remains weak, sources said. 

“The demand still hasn’t materialized, and until the demand situation turns around, I don’t see any big uptick in pricing,” said the first U.S. sheller, attributing the depressed demand on inflation throughout the U.S. and Europe.  

However, while European buyers are not contracting long-term, they are still purchasing spot loads.  

“Sales to Europe have been pretty steady in the past few weeks,” a sheller in Mexico said on Monday.  “Most of them are spot sales. No one is contracting for anything big.”  

Inshell market 

The assessed W Wichita price fell 3 cents during the period. The item traded between $3.30-$3.40/FOB equivalent.

Assessed prices for Stuart and Desirable remained unchanged with no new trades, bids, or offers reported. 

Driving the move: Demand from China, which was buying at a rapid pace leading up to its Chinese New Year on Feb. 10, has all but stopped. Sheller demand for inshell continues to reside at price levels below where many growers want to sell at given current kernel prices.  

What they’re saying: “China is not as interested as they were before New Years for sure,” said a U.S. grower on Tuesday. 

Supply: The amount of uncommitted inshell is now believed to be less than 20 million pounds throughout the U.S., according to a report by the American Pecan Council last month and word-of-mouth from market participants. 

With the amount of uncommitted inshell in cold storage so low, many growers and traders are winding down, confident that they will sell most of their remaining supply in the next few weeks.  

“We are almost done for the year,” a broker in the U.S. said on Monday. “We’ve got about 15 million pounds out west that are still uncommitted and maybe 4 million pounds in Georgia. Other than that, everything that is sitting in storage has been sold.” 

The USDA cold storage report released last week revealed that there were about 139.9 million lbs of inshell sitting in cold storage throughout the U.S. at the end of January. That’s 3% less than the same time last year, when there were 144 million lbs of inshell in storage.  

Much of the product already sold to Chinese wholesalers has not yet sold in local retail markets, and traders are waiting to see what will sell in the coming months before contracting more, said sources.