Market Insights

September 2023


The 2022/23 walnut season finishes strong, surpassing shipment expectations in August while maintaining firm pricing on available inventory. However, expectations are running high as the walnut industry braces for another record crop in the 2023/24 season, with the USDA's forecast standing at a significant 790,000 tons. Initial reports from growers point to a delayed but healthy crop this year. Prices for the new crop have held steady but are expected to soften considerably if the predicted large crop materializes. This could potentially result in another challenging year for the walnut industry.

Shipments finished strong in August at 55,441 tons, up 51.6% vs last year.  This was primarily driven by domestic shipments at 37,345 tons, which were up 81% vs last year, likely tied to the tail end of USDA purchase commitments. Exports also performed well at 18,096 tons, up 13.6% vs last year, and ending in line with last year’s total export shipments ( -0.7% YTD).

Reported commitments in August remained relatively stable, showing only a slight increase of 0.76% compared to the same period last year. However, new sales for the month saw a significant uptick, rising by 70.5% vs last year. This increase is likely a result of sales related to the remaining old crop and purchases by buyers in need of immediate coverage, driven by this year's delayed harvest. Sold percentage of total supply now stands at 98.4%, a 4.8% increase vs the same time last year. Pricing has held firm thus far, but completed trades have been relatively scarce, likely because buyers are awaiting a potential price drop in the coming weeks.

The updated carryout estimate now stands at 98,000 tons,  a significant decrease of 27.8% compared to the 136,673 tons carried over from the previous year. The USDA purchase effectively reduced inventory in the market, although it hasn't tackled the core issue facing the industry: oversupply and stagnant demand. Export demand is also on a declining trend, constituting 52% of the total supply this marketing year, a 10% decrease from the 62% it represented in 2016. This decline in export demand coincides with the growth of walnut exports from China, highlighting the shifting dynamics of the industry.

Furthermore, the walnut industry is  facing intensified competition from other nuts that are also experiencing substantial growth in crop size. The USDA's objective estimate of 790,000 tons was notably higher than what many were hoping for. If this estimate materializes, it could lead to another challenging year with poor returns for growers, underlining the persistent struggle with oversupply and evolving market dynamics.

Chile: Chile's 2023 crop volume is expected to fall below initial forecasts. The crop receipts for 2023 are projected to be approximately 170,000 MTs, which is a 9% decrease compared to last year's crop of 187,000 MTs, and a 12.5% decline from the anticipated 192,000 MTs for this year. In terms of August shipments, there was a notable increase of 12% compared to the previous year, accounting for 65% of the total crop. Commitments show crop to be 86.7% sold and current forecasts suggest that stocks will be depleted by the end of the year, underlining the strong demand for Chile's walnuts in the market.

China: China's projected 2023 crop capacity remains flat at 1.4 million MTs; however, the actual harvest outcome is yet to be determined. Chinese walnut production is primarily driven by smaller farmers, posing challenges in collecting accurate data. Nonetheless, the increase in labor and capital costs mirrors the difficulties faced by the US industry. Unlike the US, Chinese farmers lack the advantage of years of planning and experience. This circumstance could potentially lead to a reduction in walnuts harvested from more challenging rural areas. For their 2022 crop, the projected carryout is set to rise to 120,000 MTs, resulting in a forecasted total supply of 1.52 million MTs for the 2023 crop, signifying a 5% increase of 70,000 MTs compared to the 2022 crop.

Bullish Trends

  • Shipments are now up 14% YoY
  • Lowest carryout since 2020
  • Chile’s 2022 crop supply is down 9% and shipments are up 12%

Bearish Trends

  • CA’s 2023 crop is expected to be one of the largest in years at 790,000 tons (+5.3%)
  • Exports continue downward trajectory as China’s market share grows
  • Global supply for many competing nuts is also increasing
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