January 2021 Position Report Shows Post-Holiday Slump
The January 2021 Pecan Industry Position Report shows a drop in commitments and exports, even as shipments and inventory outpace past crop years.
With harvest complete, pecan producers in the Northern Hemisphere prepare their orchards and businesses for the next crop. Hedging, planting new trees, reviewing soil analysis reports, and finalizing a management plan. This time of year may seem like a quiet time for industry members in the United States and Mexico, but the work is just beginning.
In the Southern Hemisphere, producers prepare to start shaking trees and collecting their 2021 crop in year 2 of the COVID-19 pandemic. These growers and pecan processors took a hit during the lockdowns in Spring 2020. Delayed and canceled shipments, as well as restaurant and school closures, affected prices and commitments.
Buyers and handlers entered the 2020 crop year with more inventory due to the lockdowns and delayed shipments as shown in the 2019 Year-End Inventory Report but were able to move enough pecans to enter the harvest season with less inventory than the previous year. The market remained turbulent throughout the season. Shipments and commitments were both above previous levels, but exports proved to be a bigger challenge.
Pecan inventory rises in January as harvest approaches its end
The January 2021 Position Report shows a steady rise in total inventory as U.S. handlers brought in more harvested pecans. This data point reflects a pattern exhibited over the last two crop years, where inventory increases until it hits a peak in February.
U.S. handlers ended January 2021 with 255,537,881 pounds in inventory. According to the January 2021 report, this total is 3 percent less than the previous year. Furthermore, this marks the first time in the 2020-2021 crop year since September that total inventory numbers were below 2019-2020 levels.
The first data point that reflects inventory’s January increase is “Pecans Received.” This number shows the amount of pecans U.S. handlers took in throughout the month. According to the report, handlers brought in 46.56 million pounds (inshell basis) throughout January.
Even though inventory numbers have reportedly been greater throughout the recent harvest season, the January 2021 Position Report does not show an increase in pecans coming from outside the United States. According to this report, U.S. handlers purchased 9,233,687 pounds (inshell basis) from Mexico in January. Imports of inshell pecans from September to January were reportedly down 64 percent from the previous crop year.
January Shipments remain above past crop year levels
Throughout January, total shipments continued to outpace previous levels. According to the January 2021 Position Report, U.S. handlers moved 31,751,445 pounds (inshell basis), translating into a 420 percent increase from January 2020. U.S. handlers reported a 14 percent increase in pecan shipments to groceries and retailers.
Although January shipments dropped sharply from the previous month, total shipments have exceeded previous levels so far for the 2020-2021 crop year. Throughout November and December, U.S. handlers reported increased shipments to retail stores, groceries, and exports.
Inter-handler transfers also remain above previous levels for this recent crop year. These figures represent how much handlers are receiving from and shipping out to other handlers. According to the APC, handlers may report that they’ve sent out the product one month, but the recipient may not acquire the shipment until later, so it would not be recorded as received in the same position report.
The January 2021 Position Report shows handlers shipped more shelled meats and inshell pecans than they reportedly received. In fact, it shows that shipments of shelled meats for inter-handler transfers received dropped below January 2020 levels by 142 percent. Inter-hander shipments as a whole for the recent crop year outpace previous levels.
From September 2020 to January 2021, U.S. handlers reportedly shipped a total of 223,215,557 pounds of pecans (inshell basis). This number is 178 percent higher than that reported for the same period in the 2019-2020 crop year.
Pecan commitments fall after the holidays
According to the January 2021 report, total commitments dropped in January below the last two previous crop years. Following trends set in previous crop years, commitments decreased in October and then rose throughout the holiday season. This figure then broke the pattern and declined sharply in January.
The January 2021 Position Report breaks the commitment data down further by showing how many pounds were committed to exports and domestic shipments. Domestic-inshell commitments reached 2,229,651 pounds for January, a 123 percent increase from the 2019-2020 crop year. As for exports, inshell commitments dropped by 69 percent in January compared to the previous year, while shelled commitments rose by 49 percent to reach 23,615,854 pounds.
Increased inventory and a decrease in shipments and commitments are reflected in the January report’s Net Open Position. Perhaps the most important number within these reports, the Net Open Position shows uncontracted pecans in U.S. handlers’ inventories or what is available for sale. The Net Open Position takes the total inventory and deducts the total net commitment figures. U.S. handlers had 91,071,762 pounds of pecans uncontracted in their cold storage at the end of January 2021. This number is 111 percent greater than that of January 2020.
Exports dip, but still total above previous years
As the world entered the holiday season and some countries implemented the second round of lockdowns, exports dropped sharply through November and December. Total exports seemed to almost plateau in January. U.S. handlers reported a total of 6,281,799 pounds (inshell basis) for exports in January.
At first glance, one might presume that exports for the 2020-2021 crop year are lower than previous years, but by examining the position reports themselves and reviewing the country-by-country breakdown, one could see that this isn’t the case. According to the January 2021 position report, 43,982,751 pounds (inshell basis) were exported by U.S. handlers from September 2020 to January 2021. In comparison, U.S. handlers reportedly exported a total of 38,011,354 pounds for that same period in the 2019-2020 crop year.
The January 2021 Position Report shows pecans continued movement through the market. The reported inventory reflected a larger 2020-2021 crop in the United States. Furthermore, commitments throughout the holiday season outpaced past years. Although commitments dropped in January, shipments remained above previous levels.
Most U.S. producers wrapped up harvest by the beginning of February, and reports from that time stated that handlers and shellers were showing increasing interest in purchasing pecans. The American Pecan Council will publish the February 2021 report around the end of March. Industry members will then see what changes, if any occurred, throughout that month as harvest ended, vaccinations increased, and the market shifted again.
The complete January 2021 Position Report can be found at AmericanPecan.com. These reports are subject to updates and revisions as more handlers submit forms and APC staff reviews data.