The Pecan Market
How long will prices stay this high??
Brody Blain
Vice – President
Pecan – Supply and Demand
• Supply
• Production
• Imports
• Carry-in
• Demand
• Domestic Consumption
• Exports (Foreign Consumption)
Supply
U.S. Pecan Production
450
400
350
300
250
Production
200
Average (262)
150
100
50
0
2001 02
03
04
05
06
07
08
09 2010
Imported Pecans
200
180
160
140
120
Imports
100
Average (138)
80
60
40
20
0
2001 02
03
04
05
06
07
08
09 2010
Total Pecan Supply
450
400
350
300
250
200
150
100
50
0
Production
Imports
Carry-in
200
180
160
140
120
Carry-In
100
Average (111)
80
60
40
20
0
2001 02
03
04
05
06
07
08
09
10 2011
Demand
U.S. Consumption
340
330
320
310
Consumption
300
Average (309)
290
280
270
2001 02
03
04
05
06
07
08
09 2010
Exports
180
160
140
120
Exports
100
01-06 (67)
80
07-10 (134)
60
Average
40
20
0
2001 02
03
04
05
06
07
08
09
10
11
2001 – 2004 Exports by Region
EU
24%
Others
21%
Mexico
27%
Canada
28%
2009 Exports by Country
Israel, 3.5
Others, 3.2
Canada, 13.2
Asia, 40.7
E.U., 17.1
Mexico, 22.3
ASIA: China, Hong Kong, and Vietnam
Supply and Demand
• Four basic laws of supply and demand:
If demand increases and supply remains unchanged, then
it leads to higher equilibrium price and quantity.
• If demand decreases and supply remains unchanged, then it
leads to lower equilibrium price and quantity.
• If supply increases and demand remains unchanged, then it leads
to lower equilibrium price and higher quantity.
• If supply decreases and demand remains unchanged, then it
leads to higher price and lower quantity.
Production vs. Price
450
200
400
180
350
160
140
300
120
250
200
150
100
Production
80
Price
60
100
40
50
20
0
0
2001 02
03
04
05
06
07
08
09 2010
Forecast
State
AL
AR
AZ
CA
FL
GA
KS
LA
MS
MO
NM
NC
OK
SC
TX
U.S.
June-11
Tri State
Littlepage
7.0
3.0
19.0
3.5
0.5
80.0
2.0
8.5
2.0
1.5
57.0
0.5
15.0
2.0
45.0
246.5
Mexico
Carryin
July-11
TPGA
Pape
8.0
4.0
19.0
4.0
1.5
90.0
5.0
9.0
2.5
w/ks
55.0
1.0
19.0
3.0
40.0
261.0
135.0
80.0
July-11
TPGA
Brookshire
7.0
2.0
20.0
4.0
2.2
84.0
2.0
7.5
1.5
1.2
63.0
16.0
2.1
40.0
252.5
August-11
CPGA
Blain
7.0
3.0
18.0
3.5
2.0
90.0
2.0
8.0
2.0
0.5
60.0
0.0
25.0
2.0
35.0
258.0
142.0
70.0
Average “ON” & “OFF”
450
400
350
300
250
200
150
100
50
0
ON
OFF
Average "ON" (314)
Average "OFF" (211)
Predictions
Supply & Demand
600
500
400
Supply
300
Demand
200
100
0
2001 02
03
04
05
06
07
08
09
10
11
12 2013
What could affect Supply
Increase in Supply
Georgia
Texas
New Plantings
Decrease in Supply
Drought
Weather
What could affect Demand
Increase in Demand
Health Benefits
China
Decrease in Demand
Price
Food Safety
Substitution
Pecan Competition
1800
1600
1400
1200
1000
Almond
800
Pistachio
Walnut
600
400
200
0
2002 2003 2004 2005 2006 2007 2008 2009 2010
Pecan Price Competition
300
250
200
Almond $
150
Pistachio $
Walnut $
100
50
0
2002 2003 2004 2005 2006 2007 2008 2009 2010
Trends
• China wants to buy inexpensive In-shell pecans
• Tend to buy varieties typically found in the east
• Stuart
• Desirable
• Moneymaker
• Tend to buy from the east where yields are lower
Shelled to In-shell Conversion
Wholesale Shelled Pecan Price
$ 4.60
$ 4.80
$ 5.00
$ 5.20
$ 5.40
$ 5.60
$ 5.80
$ 6.00
$ 6.20
$ 6.40
$ 6.60
In-shell Conversion
40%
$ 1.34
$ 1.42
$ 1.50
$ 1.58
$ 1.66
$ 1.74
$ 1.82
$ 1.90
$ 1.98
$ 2.06
$ 2.14
42%
$ 1.41
$ 1.49
$ 1.58
$ 1.66
$ 1.74
$ 1.83
$ 1.91
$ 2.00
$ 2.08
$ 2.16
$ 2.25
44%
$ 1.47
$ 1.56
$ 1.65
$ 1.74
$ 1.83
$ 1.91
$ 2.00
$ 2.09
$ 2.18
$ 2.27
$ 2.35
46%
$ 1.54
$ 1.63
$ 1.73
$ 1.82
$ 1.91
$ 2.00
$ 2.09
$ 2.19
$ 2.28
$ 2.37
$ 2.46
48%
$ 1.61
$ 1.70
$ 1.80
$ 1.90
$ 1.99
$ 2.09
$ 2.18
$ 2.28
$ 2.38
$ 2.47
$ 2.57
50%
$ 1.68
$ 1.78
$ 1.88
$ 1.98
$ 2.08
$ 2.18
$ 2.28
$ 2.38
$ 2.48
$ 2.58
$ 2.68
52%
$ 1.74
$ 1.85
$ 1.95
$ 2.05
$ 2.16
$ 2.26
$ 2.37
$ 2.47
$ 2.57
$ 2.68
$ 2.78
54%
$ 1.81
$ 1.92
$ 2.03
$ 2.13
$ 2.24
$ 2.35
$ 2.46
$ 2.57
$ 2.67
$ 2.78
$ 2.89
56%
$ 1.88
$ 1.99
$ 2.10
$ 2.21
$ 2.32
$ 2.44
$ 2.55
$ 2.66
$ 2.77
$ 2.88
$ 3.00
58%
$ 1.94
$ 2.06
$ 2.18
$ 2.29
$ 2.41
$ 2.52
$ 2.64
$ 2.76
$ 2.87
$ 2.99
$ 3.10
60%
$ 2.01
$ 2.13
$ 2.25
$ 2.37
$ 2.49
$ 2.61
$ 2.73
$ 2.85
$ 2.97
$ 3.09
$ 3.21
62%
$ 2.08
$ 2.20
$ 2.33
$ 2.45
$ 2.57
$ 2.70
$ 2.82
$ 2.95
$ 3.07
$ 3.19
$ 3.32
Assumption – Sheller spread $1.25
Trends
• China wants to buy inexpensive inshell pecans
• Tend to buy varieties typically found in the east
• Stuart
• Desirable
• Moneymaker
• Tend to buy from the east where yields are lower
• U.S. Shellers left with high yielding western varieties
• Higher price to growers in the West (In-shell Basis)
• Better color and shelling yields
Summary
Low Supply
Short “ON” crop 2011 crop year
Probably Average “OFF” crop 2012 crop year
Should take two “ON” crops to replenish supplies to 2009 levels
2013 & 2015
Demand
Health Benefits,
China & Sheller Relationship
Brody Blain
Vice-President
800-680-1788
Any Questions?