US pistachio crop keeping prices from running rampant

Published Sep 9, 2021
The pistachio harvest kicked off in the US, Turkey, and Iran. The previous crop, harvested in 2020, broke all records globally at more than 1 million tons, as well as in the US and Turkey. However, pistachios have alternating production years with an “on-year”, where yields are high, followed by an “off-year”, where yields are low. The crop being harvested currently is in an off-year in the US and Turkey. Iran’s crop, which is supposed to be in an on-year, has been devastated by weather factors. On top of that, export demand, especially from China and the EU has been skyrocketing. All eyes now turn to the US harvest to see if they can satisfy the world’s hunger for pistachios.

Global production and demand through the roof

Worldwide pistachio production is skyrocketing, nearly doubling in the last 5 years. The US, Turkey, and Iran dominate production making up around 50%, 20%, and 20% of world production respectively. Pistachios are an alternate bearing crop. A year of high production (on-year), is followed by a year of low production (off-year). The other side of the coin is the long shelf life of pistachios. Pistachios are normally dried and kept in silos as the harvest comes in. It can then be traded throughout the rest of the year and even the following year. So it is common practice for traders to build their reserve stocks during an on-year, so their product is still available in the following off-year. Export demand for pistachios has more than doubled over the last five years, to more than 420,000 tons, and unless the US can produce a consecutive bumper crop, pistachios might be off the menu.

Production, exports, and inventory in the US, Turkey, and Iran

Over the last decade, US pistachio production has expanded rapidly. According to data from the Administrative Committee for Pistachios (ACP), the 2020 crop was more than 475,000 tons, 40% higher than in 2019 and nearly 300% higher than 5 years ago. Year-to-date exports from the US at the end of July (one month before the end of the 2020/21 marketing year) were 197,472 tons, 25% higher than the same period in 2020. This mighty crop also allowed traders to rebuild their reserve stocks, after draining it in the previous off-year. At the end of July 2021, marketable stock from the US was calculated at 163,226 tons compared to 80,831 tons at the same time in 2020.

Turkey’s 2020 crop was a record 296,376 tons, however, the incoming crop could be a slow as 100,000 tons. According to the official crop estimate by TURKSTAT, the 2021 crop could be as much as 66% lower this year, mostly due to it being an off-year. Despite Turkey being a major pistachio producer, they are mostly a net importer. This year they will be looking to their neighbor, Iran to satisfy their import needs.

Iran’s crop estimates hover around 150,000. It is supposed to be an on-year, but frost and drought wreaked havoc on the crop and it is lower than last year’s off-year crop of 190,000 tons (the crop size still needs to be finalized). Iran is the world’s second-largest exporter. The Iran Pistachio Association reports year-to-date exports until July 22nd (thus nearly the end of month 11 of the 2020/21 marketing year) at 207,000 tons, 32% higher than the previous year. This results in negative ending stock in their supply and demand estimates. IPA clarifies that the 2020 crop was likely larger and they will revise the crop size in October. The bottom line is that Iranian stocks are extremely tight and another poor crop is currently being harvested.

Source: USDA

The world is going nuts for pistachios

The world craves pistachios, with imports soaring an average of 12% per year over the last 5 years, according to USDA data. China and the European Union are at the forefront, making up 35% and 28% of world imports respectively. China’s imports were estimated to exceed 150,000 tons in 2020/21, more than double that of five years ago and an increase of 22% per year on average over the last 5 years. Europe’s appetite for pistachios increased 12% per year over the past five years, jumping to 120,000 tons in 2020/21. Turkey could import 23,000 tons. This is more than triple the amount of 5 years ago and 6% of world imports. They will most likely import much more in this marketing season as a result of their own low production.

Source: USDA

The USA crop to give the market direction

Given the mediocre crops expected in Turkey and Iran and the spiraling demand for pistachios, the US crop will be under careful observation. The first official USDA estimate of the crop will only be available in February 2022, but by then the size of the crop will already be old news. The harvest is already underway, lasting from August to mid-October. This means the best estimation of the crop size will be made by extrapolating delivery figures as they are reported monthly by the ACP.

Tridge spoke to Bob Klein, manager at the ACP, to get their views on the incoming harvest. Despite it being an off-year, they expect another bumper crop. Last year was an on-year, but according to ACP, yields could have been even higher. This scenario is historically followed by an off-year with comparatively better yields. The increased area under pistachios and reports of good yields at the early stage of the harvest are reasons to anticipate another sizable crop. ACP is using a crop estimate of 975 million pounds, or 442,000 tons, in their current calculations.

All in all, there will be fewer pistachios available than the previous marketing year, but if the US crop can reach these estimates of the ACP, and given the large inventories traders have available, there is no need for panic yet.

Source: USDA (2016/17 to 2020/21 global), ACP (2021/22 USA), TURKSTAT (2021/22 Turkey), IPA (2021/22 Iran), * 5 year average used for Syria and EU 2021/22 production

Good news for US growers

The prospect of another huge crop is good news for pistachio growers in the US, since they will be dominating the export market in the 2021/22 season. The most recent export figures from the ACP, ending July, show the appetite for USA pistachios remains strong. Although China has better trade relations with Iran and would prefer their pistachios, they will be buying from the US for the 2021/22 season.


Source: ACP

Prices are finding support, anticipating news on yields in the US

Prices are finding support from the cyclical lower production of pistachios globally, ever-increasing export demand, and a poor Iranian crop. This is counteracted by harvest pressure and the large inventories that traders built last season. The strong possibility of another excellent crop in the US is also keeping prices from spiraling higher.

Prices in the US are only slightly higher than last year but are in limbo, waiting for more information to come to the market. Currently, pistachios are trading at $1.75 to $1.90 per kilogram, $0.14 higher than last year. In Turkey, producers are being paid 22-24 lira per kilogram, compared to 18 lira last year. Turkish traders are unhappy about speculation in the market, where many speculators who do not normally form part of the supply chain, are buying pistachios, with the idea of selling when prices rise.

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