When Will Iranian Pistachio Prices Regain Export Competitiveness?

Iranian pistachio prices have been soaring since the start of 2023, as the country faces production uncertainty in the upcoming season. Irrigation water wells, many of them illegal, have dried up and production in Iran’s most important Kerman region could suffer as a result. Supply and demand dynamics indicate the price increase was overdone, yet prices remain stubbornly high. Despite any crop failures, Iran will remain a net exporter of pistachios. So the pertinent question is when prices will return to export parity.

Iranian pistachios have been priced completely out of export markets and there could be large carry-over stock going into the 2023/24 MY. The top destination for exports has also changed with these exorbitant prices. In previous years, the Far East was the top destination, having a market share of 23% of Iranian exports in 2021/22. However, in 2022/23 CIS countries have been the top destination, of which Russia and Kyrgyzstan have the largest market shares. However, on a wholesale basis, prices in Iran are up to USD 5.00/kg more expensive than they are being sold in major markets in Kyrgyzstan.

Source: Tridge

Exports at current prices are moving slowly. Only 2,038 mt was exported from 21 Mar - 21 Apr (the 7th month in the Iranian MY), the lowest monthly exports in four years. Total exports for the season are at only 39,138 mt of pistachios, far below the five-year average of 89,948 mt for the same period. If exports follow the typical export trend, it will likely only add up to 54,000 mt - but a decrease in price will certainly boost demand.

Domestic consumption in the first 7 months of the 2022/23 crop year was 11,000 mt, according to the Iran Pistachio Association (IPA). If domestic demand continues at the current pace, it will reach 19,000 mt for the full marketing year, slightly below initial estimates of 20,000 mt, as high prices have also decreased domestic consumption. This would mean the 2023/24 season could start with an inventory of 37,000 mt.

It is still too early to make accurate production projections for the 2023/24 crop. It is currently an on-year in the bi-annual production cycle of pistachios in Iran. There should be a rebound from 2022’s 106,000 mt, even under very difficult production circumstances. The average production in the last five on-years was 200,000 mt but without proper irrigation, production could be as low as 150,000 mt. Even at lower production estimates for 2023/24 there will be a significant supply of pistachios available for exports.

Source: IPA, Tridge

While the country is facing significant hurdles to continue being a top pistachio producer, exorbitant prices could do more damage than good for the industry. There could be a crash in prices, as soon as some certainty about the crop comes to light. In a typical year, prices normally build in a risk premium in June/July and decrease as the harvest nears. Prices could once again drop as the harvest approaches in September, and could even drop by 50% in order to be competitive in the export market once more.