Pecan predictions: Growers expecting a strong year

August 02, 2001
By Marvin Tessneer
Las Cruces Sun-News BUSINESS

Reports of heavy pecan and a large carry over from last year are making New Mexico pecan growers apprehensive about the coming market.

Pecans are alternate-bearing trees, and this year is what growers term an "on-year," when the trees are expected to have a heavy yield. Last year was an "off-year" when the state pecan production was 35 million pounds, 33 percent of the record 1999 crop of 52 million pounds, according to the New Mexico Agricultural Statistics Service.

The figures show the wide swings in production, which eventually affect the market that growers have to struggle with.

Shellers expect to have a cold storage carry-over by September of 130 million pounds, according to Cindy Loggins-Wise. She is the Texas Pecan Growers Association executive vice president in Bryan, Texas, and editor of Pecan South.

Growers fear that the combination of carry-over and heavy yield will create a supply-demand crunch and depress market prices.

Texas sheller Kenneth Pate reported the carry-over prediction at the Texas association's July annual meeting. He also said the national pecan production for this year was predicted at 329 million pounds of in-shell pecans.

Loggins-Wise also said that she has received reports that Mexican pecan growers expect to harvest 90 million pounds of pecans this year, and that about 45 million could be imported to the United States.

"And that's what they're predicting for part of this year's pecan supplies," she said. "From the information that we're getting now we could have a total of 500 million pounds of pecans this year to market."

The price that shellers were getting last fall for pecan meats was $4 a pound. No one is prepared to make any price quotes now, but with accumulation of negative news, shellers expect this year's prices to be lower, Pate told the Texas association.

Doña Ana County Agricultural Agent John White, a horticulturist, reported:

"It looks like we have close to a record state crop on the trees. Everyone is talking about getting close to the record, (35 million pounds) if not breaking it."

When pecan trees have a large number of nuts they usually are a little smaller. But they still can fill out well. Mesilla Valley growers are looking for a 56 to 59 percent kernel fill, which influences the selling price.

"You really can't tell how much they're going to fill out now," the horticulturist said. "The pecans are in the water stage, still filling out. We'll know about the quality better in mid- to late-September when they start to solidify. But if the pecans receive adequate water, they should fill out fine."

Growers should keep track of their pecan kernel percent because that is a good bargaining point, one of the qualities shellers look at in determining prices they will offer.

"It's important to call around with other growers to find out what they're selling their pecans for," he advised.

The Texas Pecan Association newsletter also is a good source to learn what buyers are paying per pound of pecans.

Monitoring the price helps tell buyers the potential worth of their crop. Some larger growers move their pecans into cold storage until prices improve.

"But you just can't sit on a crop," White said. "A grower has to think of the expense he has tied up in it, equipment, labor, utilities and fuel energy before putting the nuts in cold storage.

"Because of the expense cold storage isn't always the right thing for smaller growers. And even for the larger growers it's a big gamble if they hold pecans in cold storage thinking that they can beat last year's price or that this year's prices are going to get better."

And holding pecans in a shed is not the best move. Because pecans have a high oil content, not that kind that raises cholesterol, that kind that begins to turn rancid if not held in cold storage.

White is reluctant to predict prices at this time of year. They usually start out high at the beginning of harvest.

"Buyers like to buy fresh pecans, this year's crop," he said.

But when the southeast growers start harvesting, which is earlier than New Mexico, and the supply increases buyers usually start cutting prices.

Shellers have to consider many factors before offering prices to growers, according to Philip Arnold, Las Cruces San Saba Pecans buyer.

"The question is, what can the shellers pay for pecans and what they can sell the meats for?" Arnold said. "And they have to figure in transportation, what it costs to run the pecans through the plants, refrigeration if he has to hold them, labor, money interest payments and the quality of the pecans."

Shellers have to balance all of these cost factors before they can make a price offer to growers.

Shellers, like farmers, have a lot of investment money tied up before they can sell their product. Last year, he said he heard, many shelling plants were able to sell pecan meats at just break-even prices, some even lost money.

"When shellers didn't make much money they're going to be more cautious the next year," he said. "They're willing to pay a higher prices for in-shell pecans when they can sell the meats for a good price. But they have to look at the market to determine what they can pay for in-shell pecans."

He also has heard that almond and walnut growers are going to have larger than average yields this year. According to an Associated Press article, California almond growers are expecting a 21 percent increase in production this year more than last year's 700 million pounds.

If the heavy yield predictions hold true, it would be the first time the major nuts, pecans, almonds and walnut, will have abundant yields at the same time, Arnold said. That could exacerbate the excessive supply-weak demand crunch and bring down prices in all the nuts.

The processors, the candy and cookie-makers, can switch their nut ingredients around to take advantage of lower prices. And that could hurt the pecan market.

The only positive factor with this year's pecans is that if growers have the heavy yields predicted, they also will have more pecans to sell. They have the potential to make a little money, even with lower prices, Arnold said.

Pecan growers also cannot ignore the national economy, which seems far off but has, "... a trickle down effect," Arnold warned. The Federal Reserve still is juggling the interest rates to ease what Federal Reserve Chairman Alan Greenspan termed, "The period of subpar economic performance ...."

"And when there is a softer economy buyers are not as aggressive in buying pecan meats that are used by processors," Arnold said.

Glenn Honaker, Western Pecan Growers Association president labeled the pecan market outlook as "dismal." He also is the Belding Farms manager in Fort Stockton, Texas, which has 2,200 acres of pecans.

"It's a large pecan carry-in going into a large crop," he said. "It's going to depress the price fairly significantly for last year."

Last year, the market started out at $1.45 per pound for in-shell pecans, and the season ended with $1 a pound.

"I'm afraid that this year the market's going to drop below $1 a pound for in-shell pecans," he commented.

Growing pecans has been one of the fastest growing industries in New Mexico. The 2000 pecan production value was $47.95 million, 23 percent less than the 1999 value. But the lower value still is consistent with a growth pattern, the statistical service shows.

In 1970, the New Mexico growers harvested 9.2 million pounds of pecans; in 1980, the figure hit 14.5 million; the increase continued to bring in 34 million pounds in 1990, and in 1999 the production figure reached 52 million pounds, according to the statistical service.

Doña is the largest pecan-growing county with 20,900 acres.