Commodity Presentations Presented by: Jim Zion Managing Partner
Established in 1995 by Jim Zion and Martin Gesell Growers throughout California, Arizona and New Mexico Over 500 direct customers worldwide with an active presence in 40 countries Sales of over 50 million pounds of product valued at $175 million. A strategic link between growers and the marketplace.
Millions Commodity Production vs. Farm Value 2,500 $4.00 2,000 1,500 1,000 500 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 Farm Price/lb. 0 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 $0.00 Pistachios Walnuts Pecans Pistachio Value Walnut Value Pecan Value
Pistachio Industry
Commodity Overview US is the production leader followed by Iran and Turkey Major production areas are California, Arizona and New Mexico with minor production in Nevada, Texas and Utah Good bet US production will top 1 billion pounds by 2018 Demand remains strong in all markets but especially in China. China takes 1 out of every 3 nuts produced in the US US industry is dominated by one large grower/processor Health message and active lifestyle is driving demand
US Pistachio Production 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 0 200 400 600 800 1000 1200 1400 Millions of Pounds
Millions World Pistachio Production 1000 900 800 700 600 500 400 300 200 100 0 USA Iran Turkey Syria Afghanistan
Millions US Export vs. Domestic Shipments 600 500 400 300 200 100 0 Export Domestic *Estimated
Millions US Shipments by Regions 250 200 150 100 50 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 0 N. America Europe Asia Middle East/Africa Other Central/S. America
Crop Year Analysis 2017 crop once again proves we can not estimate crops Iran had an off year Total world supply topped at 1.2 billion pounds and market did not collapse Market has remained fairly stable since harvest Grower returns will be less but still attractive Health message and expanding middle classes worldwide are key drivers of demand. Exports, especially to China, continue to take majority of the US produced pistachios We do expect processing side of business to change in the next few years. Biggest challenges are water availability, increasing labor cost, labor shortages and uncertain trade policy.
Pecan Industry
Commodity Overview Pecans grow in 15 states from California to Florida Much of Mexico s production comes to US for shelling Most new plantings are in Western US with orchard rehabs happening in Southeast US. Industry recently formed a Federal Marketing Order Will see increasing competition from countries such as South Africa, Australia and parts of South America. Industry has been plagued by stagnant production growth. We are seeing fundamental changes happening in the pecan industry.
Million (Inshell lbs) US Pecan Production 400 350 300 250 200 150 100 50 0
000 pounds inshell 700,000 Total Supply Components US and Mexico 600,000 500,000 400,000 300,000 200,000 100,000-10-11 11-12 12-13 13-14 14-15 15-16 16-17 Sept 30 Carry In Crop size Mexico Total Supply
Millions World Pecan Production 400 350 300 250 200 150 100 50 USA Australia Mexico S. Africa 0
Millions US Exports 120 100 80 60 40 20 0 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 *Countries included China, Hong Kong and Vietnam
Crop Year Analysis Supply was slightly less than expected Grower prices this year increased rapidly on speculation crop was short Production in Mexico helped to close the gap and lower prices. Some processors may have issues with high priced inshell pecan inventories Pecans are currently one of the higher priced nuts in the marketplace
Walnut Industry
Commodity Overview English walnuts are grown in California China grows almost as many walnuts as the U.S. but all of their crops are consumed internally and they continue to be one of the largest importers for U.S. walnuts to meet their supply demand. The California Walnut Marketing Board has increased their marketing budget to be more inline with the industry as they grow worldwide interest. The U.S. crop continues to grow each year and we continue to see new plantings each year statewide.
Thousands US Walnut Acreage 350 300 250 200 150 100 50 0 Bearing Non-Bearing
Millions US Walnut Production 1,600 1,400 1,200 1,000 800 600 400 200 0
Millions World Walnut Production 2500 2000 1500 1000 500 0 USA China Turkey Chile Ukraine
Millions US Export vs. Domestic Shipments 1400 1200 1000 800 600 400 Export Domestic 200 0
Millions US Shipments by Regions 600000 500000 400000 300000 200000 100000 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 0
Crop Year Analysis February walnut receipts were at 679,225 tons which is up from the initial estimate of 670,000 tons. Pricing has remained steady with substantial market support even with another record crop. Demand continues to remain strong and the industry is close to being 100% committed with 5 months until new crop. New varieties continue to be planted and developed in order to meet worldwide demand.
General Comments Demand for nuts is growing as the health message continues to grow Expect increased promotional activity across the nut industry New buzz word is sustainable portable protein Nuts may avoid some labor cost increases through mechanization. Much of the nut industry is export driven. Concern remains over uncertain trade policies and protectionist rhetoric. Grower returns will moderate but still remain attractive Expect more interest in expanding production in other states and countries as California becomes less attractive The old adage in land value still remains Water, Water, Water!