Stubbornly High Prices
Iran pistachio prices remain abnormally high, pricing them out of the export market. The price of Iranian pistachios soared early in 2023 on fears of a possible failure of the crop currently being harvested (between Sep-23 and Nov-23). These concerns were fueled by reports of drying water wells, which are crucial for irrigation, suggesting the 2023 crop might be severely affected. As a result, wholesale prices, as monitored by Tridge, jumped by 62% since the beginning of the year. Although the actual impact on the crop was less severe than initially feared, prices haven't come down. Consequently, there's now a supply-demand mismatch, resulting in a significant surplus of pistachios even as a new, abundant harvest approaches.
The average price of in-shell pistachios in major wholesale markets indicates that Iranian pistachios are more expensive than those in Italy, a key European import hub. This price difference is notable even before accounting for the added costs of exporting from Iran to Europe. This disparity can affect the competitiveness of Iranian pistachios in European markets, especially when considering the additional shipping and import expenses.
Exports and Domestic Consumption in 2022/23
Iran exported a mere 52,695 metric tons (mt) of pistachios in the first 11 months of the 2022/23 marketing year (MY), according to the Iran Pistachio Association (IPA). Exports are expected to reach only around 55,500 mt for the full marketing year. This is far less than the five-year average of 123,221 mt. This year's export is the second-lowest in over ten years. The only year with lower exports was 2018/19, following a crop failure. However, in 2018/19, the low exports were due to limited stock availability, while in 2022/23, a price decline was the primary reason for lower exports. Exports of Iranian pistachios to Commonwealth of Independent States (CIS) countries have stayed strong. Specifically, Russia imported an estimated 8,589 mt in the 2022/23 season, accounting for 15% of Iran's total pistachio exports.
Domestic consumption has also suffered due to the high prices in domestic markets. The IPA estimates domestic consumption at 14,000 mt in the first 11 months of the 2022/23 MY. Domestic consumption could reach 15,000 mt for the full year, down 25% year-on-year (YoY) and 13% below the five-year average.
Production in 2023
The harvest is currently underway, and while it is still early to determine the quality and the exact size of the crop, early indications are of normal yields. The current crop estimate by the IPA is 210,000 mt, nearly double the production in 2022 of 106,000 mt. This is due to the bi-annual bearing cycle of pistachios. After yielding a smaller crop last year, the trees were able to divert more energy into producing nuts this year, resulting in a much larger crop. This boost in production occurred despite water supply challenges during the growth cycle of the nut. The water stress experienced this year serves as an early warning sign that the 2024 pistachio crop could potentially be considerably smaller. This is because the trees have expended a significant amount of their energy on producing this year's crop, leaving them with diminished resources for the following year's production.
Large Inventories and Export Demand
Considering the limited exports, underwhelming domestic consumption in the 2022/23 season, and a sizable carry-over, the projected supply for the 2023/24 season is estimated to be 244,500 mt. The determining factor for exports and domestic consumption will be price, especially if Iran aims to regain lost market share in European and Asian countries. Considering the current supply situation, it would be exceptionally unlikely for prices to remain at their current levels. Under the assumption that prices will move to export parity, exports and domestic consumption are poised to rise in the 2023/24 MY.
Source: IPA, Tridge