October Position Report Shows More Pecans Available, Greater Inventory
Anticipating the holiday season, U.S. handlers fill inventories throughout October.
At this time, pecan growers in the Northern Hemisphere are deep into harvest. Many finished shaking trees before Thanksgiving, while some wrap up their final rounds in early December. Most western producers are now collecting nuts after a bout of cold weather.
At the season’s start, industry members expressed concerns that buyers and handlers would have large carry-over due to lockdowns and delayed shipments caused by the pandemic. The 2019 Year-End Inventory Report showed that U.S. handlers entered the current crop year with more inventory, but the subsequent September 2020 Position Report indicated that they moved enough pecans to enter harvest season with smaller inventory than last year.
The October 2020 Position Report exhibits another rise in total inventory just as more pecans came in. The first data point that reflects this 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 21.1 million pounds (inshell basis) throughout October. This number is 53 percent greater than what handlers received in October 2019.
Handlers also reported a total inventory of 164,993,933 pounds at the end of October. This marks another increase—12 percent—from the previous year. Comparing the October 2020 report to September’s, we can see that inventory breaks a pattern set by the two previous crop years, where inventory dropped in October and then picked up in November. This year, inventory started at around 2018 levels and then rose in October.
Although handlers began filling inventories in October, the Position Report does not show an increase in pecans coming from outside the United States. According to this report, U.S. handlers purchased 1,735,837 pounds (inshell basis) from Mexico—a 53 percent decrease from 2019. Imports of inshell pecans from Mexico, specifically, were reportedly down 69 percent this October.
Total shipments also dropped in October but remained higher than in 2019. Handlers shipped 275 percent more inshell pecans to retail/grocery/export channels than last year, while shipments for shelled meats are lower than in previous years.
Inter-handler transfers also fluctuated throughout October. 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 yet so it would not be recorded in the same position report.
The October 2020 Position report shows handlers received more shelled meats than they shipped to others, but they also transferred more inshell pecans than they received.
Furthermore, this report shows that more shelled pecans were received by inter-handler transfers than shipped out. Therefore, handlers were accumulating pieces and halves; simultaneously, they transferred more inshell pecans—potentially for other handlers to shell or sell on the export or grocery markets.
Total commitments sit below previous years’ numbers. This dip follows trends set in previous crop years where commitments decrease in October and rise in the following months. The next few position reports will reveal if this is still the case for 2020.
Increased inventory and lower commitments are evident in October’s Net Open Position. On Oct. 31, the Net Open Position was 77,636,773 pounds—a 104 percent increase from last year. The Net Open Position shows how many pecans U.S. handlers have available for sale in their inventories. Therefore, U.S. handlers accumulated more pecans throughout October and then ended the month with almost half of their inventory uncontracted and available.
Even with a greater inventory, handlers continued moving pecans throughout October. Total exports were up 60.8 percent this October. More inshell pecans were exported to China than last year, as Chinese buyers seemed to take advantage of low prices.
The October 2020 Position Report shows that U.S. handlers were preparing for the approaching holiday season by filling inventory and transferring pecans amongst themselves. But it also provides further evidence that commitments are down this year. As the world enters potentially the pandemic’s deadliest wave, states and other countries prepare to implement new lockdown measures. How these lockdowns will further impact commitments is yet to be seen.