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The Pecan MarketHow long will prices stay this high??
Brody BlainVice – President
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Pecan – Supply and Demand
• Supply• Production• Imports• Carry-in
• Demand• Domestic Consumption• Exports (Foreign Consumption)
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Supply
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U.S. Pecan Production
2001 02 03 04 05 06 07 08 09 20100
50
100
150
200
250
300
350
400
450
ProductionTrendAverage (262)
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Imported Pecans
2001 02 03 04 05 06 07 08 09 20100
20
40
60
80
100
120
140
160
180
200
ImportsTrendAverage (138)
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Total Pecan Supply
2001 02 03 04 05 06 07 08 09 10 *20110
50
100
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250
300
350
400
450
ProductionTrendImportsTrend
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Carry-in
2001 02 03 04 05 06 07 08 09 10 20110
20
40
60
80
100
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Carry-InLinear (Carry-In)Average (111)
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Demand
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U.S. Consumption
2001 02 03 04 05 06 07 08 09 2010270
280
290
300
310
320
330
340
ConsumptionLinear (Consumption)Average (309)
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Exports
2001
02 03 04 05 06 07 08 09 10 110
20
40
60
80
100
120
140
160
ExportsTrend01-06 (67)07-10 (134)Average
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2001 – 2004 Exports by Region
Mexico27%
Canada29%
Others21%
EU24%
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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
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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.
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Production vs. Price
2001 02 03 04 05 06 07 08 09 20100
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0
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ProductionLinear (Production)PriceLinear (Price)
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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
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Average “ON” & “OFF”
2001 02 03 04 05 06 07 08 09 20100
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ONOFFAverage "ON" (314)Average "OFF" (211)
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Predictions
2001 02 03 04 05 06 07 08 09 10 11 12 20130
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Supply & Demand
SupplyDemand
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What could affect Supply
Increase in SupplyGeorgiaTexasNew Plantings
Decrease in SupplyDroughtWeather
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What could affect Demand
Increase in DemandHealth BenefitsChina
Decrease in DemandPriceFood SafetySubstitution
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Pecan Competition
2002 2003 2004 2005 2006 2007 2008 2009 20100
200
400
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800
1000
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AlmondLinear (Almond)PistachioLinear (Pistachio)WalnutLinear (Walnut)
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Pecan Price Competition
2002 2003 2004 2005 2006 2007 2008 2009 20100
50
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Almond $Linear (Almond $)Pistachio $Linear (Pistachio $)Walnut $Linear (Walnut $)
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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
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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
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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
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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
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Any Questions?
Brody Blain Vice-President 800-680-1788