New Mexico pecan growers are glad they’ve harvested the last of their 2011 crop, hampered by snow and rain in December and January — but they are not so happy over the drop in prices that has occurred since late last summer.
“Overall, has been a good, but very long year,” says pecan grower and buyer Phil Arnold, Las Cruces, N.M. “I’m looking forward to closing it up and moving on to the new season.”
The latest estimates put the size of the state’s 2011 crop at about 63 million pounds, while the National Pecan Shellers Association’s final estimate of the U.S. crop was 280.5 million pounds.
New Mexico’s production was down for the on-year 2011 crop — not much more than the 50- to 60-million pounds in 2010.
“That’s the smallest difference in size between on- and off-year crops in New Mexico that we’ve ever seen,” says Arnold.
The main reason is the pruning growers have been doing to offset the alternate bearing cycle of pecan trees.
Another reason, he notes, was last February’s cold snap, when temperatures in the Mesilla Valley stayed below freezing for 95 straight hours, including several nights below zero.
“That killed a lot of fruiting wood in the orchards,” he says. “Also, we had a hot summer without the usual amount of monsoonal moisture than we normally get.”
The result has been a wider-than-usual variation in quality of 2011 pecans.
Late last summer, growers in Georgia and the Southeast were contracting sales of 2011 crop in-shell pecans at $5.50 a point, Arnold reports. The price per-point is the dollars per pound of edible nut meat. The higher the nut meat yield in relation to the weight of the whole or in-shell pecan, the higher the price paid to a grower for a pound of in-shell pecans.(Meat point price X the percent kernel yield = price per pound).
Prices peaked at above $6 per point before beginning to fall.The U.S. shelling market started at $5-5.25 per point in mid-November, sliding to the $4.70-$4.85 per point range in mid-January
One reason for the decline may be buyer resistance to the higher prices, especially in New Mexico and other western areas, Arnold says.
Typically, western U.S. pecans yield more meats per pound than those grown in the Southeast. So, at a market price of $6 per point last fall, the in-shell price for pecans grown there, with a 50 percent nut meat percentage, would have been $3 a pound.
However, Arnold tells of one Arizona grower, who harvested pecans early last November with a 60.4 nut meat percentage and was unable to find a buyer for them at the price. That additional 10 points of yield worked out be an in-shell price of about $3.60 per pound.
“Chinese buyers were interested in the Arizona pecans because of their size and kernel fill,” Arnold says. “But, at that high price, they wouldn’t even look at the nuts. Those price levels have kept Western pecans from getting into the Chinese market to the same degree as they did several years ago.
“Over the last two years, the Chinese have become more of a price-per-pound buyer. They also want larger pecans, like the Desirables and Stuarts grown in the Southeast. The high prices in the Southeast this year may have been due to a frenzy to get pecans to China for its New Year. In addition, there was worry about severe weather problems that devastated production in Texas and Oklahoma.
“Ultimately, the high prices in the Southeast caused a drop in Chinese consumption. That, plus an extra 20 million pounds produced in Georgia and an increasing domestic buyer resistance, caused the in-shell market to soften.”
Another reason for the price downturn was the quality of the latest Western and Mexican crops. Last season’s growing conditions resulted in more off-grade and smaller nuts, which created more nut pieces that usually don't sell for as much as halves, Arnold explains. The increase in pieces on the market helped drag down the prices for Western pecans.
He suggests that growers who are disgruntled with current pecan prices view things in perspective. “Even at $4.30 a point, with a 57 percent meat yield, you’re looking at an in-shell price of $2.45 per pound,” Arnold says. “That’s still the second-highest in-season price ever.”
Many, including Arnold, wouldn’t be surprised to see pecan prices strengthen later in this marketing year.
“I think there has been more spot buying by end-users as we go into the rest of the year,” he says. “So, there will probably be more contracts written as they start buying again. In addition it looks as though there will be a lack of Fancy Junior Mammoth Halves.”
Western pecan nuts are noted for these higher value halves. That should benefit sellers with a decent supply of good quality halves, he notes.
This is encouraging more New Mexico growers to put part of their crop into cold storage in order to market at a more attractive price later this spring or even into the fall, Arnold says. That could represent an estimated 15 to 18 million pounds of the 2011 production.
“Also, some growers are contracting to sell pecans to shellers or buyers at a given price, then taking deferred payments, similar to what walnut growers do. The idea is to help support higher prices. This way, instead of the shelling industry having to come up with a lot of money to buy the entire crop at once, growers participate more in financing the crop through the course of the marketing year.”
While the export market is important, “the majority of pecans shelled in the U.S. are being consumed here,” he says. “Let’s give credit where credit is due — without American consumers, pecan prices wouldn’t have reached the level they are now. As with other tree nuts, Americans are buying pecans not just as a snack food, but also because of their health benefits.”
He’s encouraged by recent efforts of growers and shellers around the country to more aggressively market pecans. “People are starting to donate money for programs to promote pecans domestically and internationally — exciting things are beginning to happen in the pecan business.”