the pecan market how long will prices stay this high?? brody blain vice – president

The Pecan MarketHow long will prices stay this high??

Brody BlainVice – President

Pecan – Supply and Demand

• Supply• Production• Imports• Carry-in

• Demand• Domestic Consumption• Exports (Foreign Consumption)

Supply

U.S. Pecan Production

2001 02 03 04 05 06 07 08 09 20100

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ProductionTrendAverage (262)

Imported Pecans

2001 02 03 04 05 06 07 08 09 20100

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ImportsTrendAverage (138)

Total Pecan Supply

2001 02 03 04 05 06 07 08 09 10 *20110

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ProductionTrendImportsTrend

Carry-in

2001 02 03 04 05 06 07 08 09 10 20110

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Carry-InLinear (Carry-In)Average (111)

Demand

U.S. Consumption

2001 02 03 04 05 06 07 08 09 2010270

280

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340

ConsumptionLinear (Consumption)Average (309)

Exports

2001

02 03 04 05 06 07 08 09 10 110

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160

ExportsTrend01-06 (67)07-10 (134)Average

2001 – 2004 Exports by Region

Mexico27%

Canada29%

Others21%

EU24%

2009 Exports by Country

Asia; 40.7

Mexico; 22.3

E.U.; 17.1

Canada; 13.2Israel; 3.5

Others; 3.2

ASIA: China, Hong Kong, and Vietnam

Supply and Demand • Four basic laws of supply and demand:

If demand increases and supply remains unchanged, then it leads to higher equilibrium price and quantity.

• If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and quantity.

• If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity.

• If supply decreases and demand remains unchanged, then it leads to higher price and lower quantity.

Production vs. Price

2001 02 03 04 05 06 07 08 09 20100

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ProductionLinear (Production)PriceLinear (Price)

ForecastJune-11 July-11 July-11 August-11Tri State TPGA TPGA CPGA

State Littlepage Pape Brookshire BlainAL 7.0 8.0 7.0 7.0AR 3.0 4.0 2.0 3.0AZ 19.0 19.0 20.0 18.0CA 3.5 4.0 4.0 3.5FL 0.5 1.5 2.2 2.0GA 80.0 90.0 84.0 90.0KS 2.0 5.0 2.0 2.0LA 8.5 9.0 7.5 8.0MS 2.0 2.5 1.5 2.0MO 1.5 w/ks 1.2 0.5NM 57.0 55.0 63.0 60.0NC 0.5 1.0 0.0OK 15.0 19.0 16.0 25.0SC 2.0 3.0 2.1 2.0TX 45.0 40.0 40.0 35.0

U.S. 246.5 261.0 252.5 258.0 Mexico 135.0 142.0 Carryin 80.0 70.0

Average “ON” & “OFF”

2001 02 03 04 05 06 07 08 09 20100

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ONOFFAverage "ON" (314)Average "OFF" (211)

Predictions

2001 02 03 04 05 06 07 08 09 10 11 12 20130

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Supply & Demand

SupplyDemand

What could affect Supply

Increase in SupplyGeorgiaTexasNew Plantings

Decrease in SupplyDroughtWeather

What could affect Demand

Increase in DemandHealth BenefitsChina

Decrease in DemandPriceFood SafetySubstitution

Pecan Competition

2002 2003 2004 2005 2006 2007 2008 2009 20100

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AlmondLinear (Almond)PistachioLinear (Pistachio)WalnutLinear (Walnut)

Pecan Price Competition

2002 2003 2004 2005 2006 2007 2008 2009 20100

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Almond $Linear (Almond $)Pistachio $Linear (Pistachio $)Walnut $Linear (Walnut $)

Trends• China wants to buy inexpensive In-shell pecans• Tend to buy varieties typically found in the east

• Stuart• Desirable• Moneymaker

• Tend to buy from the east where yields are lower

Shelled to In-shell ConversionWholesale Shelled Pecan Price

$ 4.60 $ 4.80 $ 5.00 $ 5.20 $ 5.40 $ 5.60 $ 5.80 $ 6.00 $ 6.20 $ 6.40 $ 6.60

In-shell Conversion

40% $ 1.34 $ 1.42 $ 1.50 $ 1.58 $ 1.66 $ 1.74 $ 1.82 $ 1.90 $ 1.98 $ 2.06 $ 2.14

42% $ 1.41 $ 1.49 $ 1.58 $ 1.66 $ 1.74 $ 1.83 $ 1.91 $ 2.00 $ 2.08 $ 2.16 $ 2.25

44% $ 1.47 $ 1.56 $ 1.65 $ 1.74 $ 1.83 $ 1.91 $ 2.00 $ 2.09 $ 2.18 $ 2.27 $ 2.35

46% $ 1.54 $ 1.63 $ 1.73 $ 1.82 $ 1.91 $ 2.00 $ 2.09 $ 2.19 $ 2.28 $ 2.37 $ 2.46

48% $ 1.61 $ 1.70 $ 1.80 $ 1.90 $ 1.99 $ 2.09 $ 2.18 $ 2.28 $ 2.38 $ 2.47 $ 2.57

50% $ 1.68 $ 1.78 $ 1.88 $ 1.98 $ 2.08 $ 2.18 $ 2.28 $ 2.38 $ 2.48 $ 2.58 $ 2.68

52% $ 1.74 $ 1.85 $ 1.95 $ 2.05 $ 2.16 $ 2.26 $ 2.37 $ 2.47 $ 2.57 $ 2.68 $ 2.78

54% $ 1.81 $ 1.92 $ 2.03 $ 2.13 $ 2.24 $ 2.35 $ 2.46 $ 2.57 $ 2.67 $ 2.78 $ 2.89

56% $ 1.88 $ 1.99 $ 2.10 $ 2.21 $ 2.32 $ 2.44 $ 2.55 $ 2.66 $ 2.77 $ 2.88 $ 3.00

58% $ 1.94 $ 2.06 $ 2.18 $ 2.29 $ 2.41 $ 2.52 $ 2.64 $ 2.76 $ 2.87 $ 2.99 $ 3.10

60% $ 2.01 $ 2.13 $ 2.25 $ 2.37 $ 2.49 $ 2.61 $ 2.73 $ 2.85 $ 2.97 $ 3.09 $ 3.21

62% $ 2.08 $ 2.20 $ 2.33 $ 2.45 $ 2.57 $ 2.70 $ 2.82 $ 2.95 $ 3.07 $ 3.19 $ 3.32

Assumption – Sheller spread $1.25

Trends• China wants to buy inexpensive inshell pecans• Tend to buy varieties typically found in the east

• Stuart• Desirable• Moneymaker

• Tend to buy from the east where yields are lower

• U.S. Shellers left with high yielding western varieties• Higher price to growers in the West (In-shell Basis)• Better color and shelling yields

Summary

Low SupplyShort “ON” crop 2011 crop yearProbably Average “OFF” crop 2012 crop yearShould take two “ON” crops to replenish supplies to 2009 levels

2013 & 2015

DemandHealth Benefits, China & Sheller Relationship

Any Questions?

Brody Blain Vice-President 800-680-1788