Market Insights

July 2023


The positive momentum seen in May continued in June, driven by the impact of the USDA purchase, resulting in above-average shipments and a projected lower carryout. While crop
receipts for the 2022 crop year remained unchanged at 747,870 tons, there is an expectation of a slight adjustment before the season's end, leading to an estimated total supply of
891,000 tons (+7.7% compared to 2021).

Shipments performed well in June, reaching 53,470 tons, a 12% increase vs last year. The strong performance can be attributed to the positive influence of the USDA purchase and the
adjusted crackout rate (40.1%). However, exports continue to suffer, down 19.7% compared to last year (-2.5% YTD). This trend is expected to continue as China floods the market with
low-cost walnuts. The estimated unshipped inventory now stands at 205,557 tons, a 1.1% increase vs last year, despite having 7.7% less total supply. Forecasts point towards above average shipment performance for the rest of the season.

Reported commitments in June saw a considerable increase of 23% vs last year, with new sales FTM rising by 12% compared to the same period last year. This growth can be attributed
to the positive impact of the USDA purchase and the lower crackout rate. The sold percentage of total supply is now estimated at 94.2%, a 4.3% increase vs last June.

The carryout projection remains at 92,000 tons, a 32% reduction from last year’s carry out of 136,673 tons. The USDA purchase successfully achieved its objective of reducing lower quality combo inventory from the market, alleviating concerns for handlers holding undesirable inventory. The increasing scarcity of lighter walnuts has led to a slight price increase in recent weeks. However, the true inventory levels and their impact on pricing remain uncertain. The incoming new crop is speculated to be one of the best in years, and unless there is a massive reduction in walnut trees, and significant increase in demand, achieving desired pricing levels will be challenging.

Chile: Chile’s 2023 crop was recently harvested and will fall short of expectations. Their 2023 crop receipts will finish around 168,000 MTs, down 10% vs last year’s crop of 187,000 MTs and down 12.5% vs this year’s expectation of 192,000 MTs. Through June, shipments out of Chile are up 22% vs last year, with Inshell shipments leading the way, up 32% vs last year.

China: China’s 2023 crop is forecasted to be flat at 1.4 mn MTs. This is most likely due to the inability to get reliable information out of China. Their 2022 crop carryout is forecasted to
increase to 120,000 MTs. This results in a forecasted total supply of 1.52 mn MTs for 2023 crop, up 70,000 MTs or 5% over 2022 crop.

Bullish Trends

  • Shipments are now up 9.9% YoY
  • USDA shipments are going out, resulting in better shipment numbers and lower available inventory
  • Chile’s 2022 crop supply is down and shipments are up

Bearish Trends

  • CA’s 2023 crop is expected to be one of the largest in years
  • China’s overall supply is forecasted to increase 5% this year
  • Demand continues to decline in developed markets
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