Wednesday, May 14, 2008

Pecan Market Update May 5,2008

Cold storage holdings for the month of April were reported to be 331,339,000 pounds. This is a slight increase of 3.5 million Pecan pounds. This should be the peak. If history repeats itself, we most likely will begin reducing the cold storage holdings in April all the way through September – deducting what would appear to be around 160 million pounds. If so, the carry out would be approximately 171 million pounds at the end of September – which is high.

The uncharted waters that we have been mentioning in our recent market updates appear to be realistic. Here we are with a large cold storage number and what also looks like will be a large carry-out but the market remains very strong along with some sizes and grades being very short – particularly with halves.

It appears the reasons for this being the case are as follows:

We are going into the off-year; although, it’s too early to be sure of how short the crop will be. We will keep you informed.
Consumption of Pecans remains strong; furthermore, we are still getting heavy interest from customers still needing to contract needs for this year.
Walnut pieces remain strong and customers continue to look at pecans as an alternative supply.
Customers, for the most part, contracted solidly through December 2008.
Inshell pecans continue to be held to supply already written contracts. With that, inshell is still being held by growers and some shellers for China to cover their needs until new crop becomes available to ship.
China’s usage remains strong. The commerce department reported 29,432,578 pounds of inshell pecans have already been shipped to the orient through the month of February. The guess is that China will buy about 15 to 20 million more pounds between the end of February through the month of September of 2008.

It is definite that the uncharted waters are in full swing. As always and more than ever, proceed with caution.

Kind Regards,

Sam DiGregorio
Southwest Nut Company

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