US Walnut Report, February 2023
Shipments
-In February, inshell walnut shipments increased by 4.1 million pounds (25%) compared to February 2022, totaling 20.2 million pounds.
-Season to date inshell shipments through February amounted to 181.2 million pounds, showing a 5% increase of 7.9 million pounds compared to the same period last season.
-Conversely, shelled walnut shipments decreased by 2.9 million pounds (6%) in February, totaling 44.8 million pounds.
-Season-to-date shelled shipments through February increased by 3% (6.5 million pounds) compared to the same period last season, reaching 258.7 million pounds.
Buyers in North America and the Middle East/North Africa have been actively taking advantage of the lowest pricing seen in recent history, leading to strong February walnut shipments from California. However, buyers in Europe have been slower to jump into the market due to large inventory positions at the start of the season. Shipments to key Asian markets are also trailing last season, but activity is improving recently. Overall, the graph illustrates an increase in overall shipments over the prior season, with shipments as a % of the crop at the same level as the prior season.
Purchase Commitments
The purchase commitments of about 192,000 inshell equivalent tons are in line with the prior season. However, the majority of commitments consist of shelled walnuts as little inshell remains in California that would make export grade.
Remaining Supply Available for Sale
As of February 28, the remaining supply available for sale was approximately 308,000 inshell equivalent tons. However, this figure is likely to be reduced due to the lower shell out rate (meat yield), higher levels of defects, and lower color in this season’s crop. Additionally, the recently announced USDA purchases of up to $90 million will also eat into the remaining inventory, accounting for up to 10% of this season’s total supply, depending on price.
Summary
The February shipments of walnuts from California were strong, but the industry needs to improve its inventory position heading into the 2023/24 crop. Although the season to date shipments are +3.0% over the prior season, February shipments decreased by 2.1% compared to February 2022. To achieve a manageable carryout, the shipment pace needs to improve over the coming months. However, some trends in the market point toward stronger shipments in the future. Lower prices have resonated well in the US and Canadian markets, and it is expected that shelled walnut shipments to Europe will improve over the coming months due to higher pricing from Chile. Shipments to Japan and Korea are also expected to increase as buyers have worked through higher priced inventory and are now looking to lock in supply at lower prices. The recently announced USDA purchase of up to $90 million of shelled walnuts will also boost domestic shipments during the summer months.
New Crop Business
The market for new crop business opened during the Gulfood Exposition in mid-February, and early demand has been strong in some markets, including India, Morocco, and Russia. However, buyers in other markets, such as Europe, Turkey, and UAE, have been slower to jump in as they evaluate opening pricing compared to other origins. Some packers in Chile have already reported full inshell production schedules for most of May and part of June. If business continues at the current pace and early production continues to fill, we anticipate steady pricing. Kernel business (machine cracked) may be more challenging as competition from other origins will remain in the market and likely push pricing lower.
