Disappointment over prices many New Mexico growers expressed for their off-year 2008 pecan crop – ranging from around $1.35 to $1.55 per pound – has turned to joy.
“This year, growers have been very happy about pecan prices,” says veteran pecan grower and buyer Phil Arnold, Las Cruces, N.M.
Last November he was hoping to get $1.30 for his 2009 crop pecans. However, he was able to sell them for $1.75 to $1.80 a pound the second week of December. “Some growers report selling theirs for over $2 a pound,” Arnold says.
Smaller-than-expected yields for the 2009 crop account for part of the price turn-around. “This was one of those years where, instead of getting bigger, the on-year crop actually shortened up some,” he says. Scab problems and wet weather at harvest reduced yields for many growers in the Southeast United States, while frost and drought in Texas, along with aphids, and a cooler and drier than normal summer in New Mexico limited crop size in the Southwest.
However, the biggest factor in the run-up of pecan prices has been the growing appetite of Chinese consumers for pecans, Arnold says. Since the first sales of pecans to China in 2005, Chinese purchases of pecans grown in the U.S. and Mexico have more than doubled each successive year.
“The wild buying by the Chinese last year had a dramatic effect on prices,” he says. “By this past Christmas a number of estimates put the total amount of North American 2009 crop pecans sold and on the way to China at 60 to 70 million pounds. And now some in the industry think that as many as 110 to 120 million pounds have either been contracted or have left the U.S. for China. If that’s the case, then China has already accounted for 20 percent of the North American supply of 2009-crop pecans this year.”
Much of the demand for pecans has been being fueled by celebrations of the Chinese New Year this month. Nuts in general are a popular food for this, the most important traditional Chinese holiday, Arnold notes.
Also, buying by some speculators may have also contributed to recent pecan sales.
“Sales later in the year will give a more accurate picture of the continued strength in the Chinese demand for pecans,” he says. In fact, he’s hearing reports of pecan shipments starting to stack up on the docks in China and some, either paid for or with price agreements, sitting in cold storage here at home for later shipment to China.
“It’s almost freakish how quickly and how big that market has developed for pecans,” he says. “I’m very happy about the current situation. But, at the same time, I’m also a little nervous. It could go in the other direction just as fast.”