Walnut Market Update September 2021

While there have been reports of a shortage of walnuts in the United States and many other countries, it is inaccurate to say that there are major repercussions in the global walnut market.

This is due to the fact that most of the shortage has been accurately met by a rise in demand for Chinese walnuts. Elsewhere, there has been an increase in walnut production as well which has definitely helped the market this season. 

This, of course, begs the question: how is every country dealing with unforeseen climatic and regional circumstances? The answer is as follows.

China

Overall, the total output for Chinese walnuts has been down due to hail and cold weather in the Xinjiang region, damaging most of the walnut orchards. Furthermore, the ripening fruit was smashed by hail and growers complained about a 30% decrease for inshell per tree. However, in the northern regions of China, such as the Yunnan region where production has increased by 10%.

For inshell walnuts, the market price has been much higher than expected which makes the possibility of prices falling quite impossible. This is primarily due to the fact that manufacturers have no interest in processing raw materials for trading companies anymore so there are plenty of unfinished orders in the market.

Due to the trade barriers created during COVID-19, there is still the issue of high freight rates which look to continue for the next two years at most. However, some Chinese walnut companies in particular have established FOB contracts so prices may be low for them.

Of course, not all companies are doing that so prices have increased to accommodate demand for these specific suppliers. 

In spite of all of this, no major disaster has affected the industry in China so the harvest volume is still about 4,000,000 tonnes the same as last year.

United States & Chile

The United States, however, has suffered in the walnuts depart. Due to drought and high temperatures, walnut production is expected to drop by 15%. To cope with the shortage in the US walnut market, many suppliers have turned to China. 

Since China has been able to cope with any form of environmental issue, they were able to secure new traders.

Quality Of Walnuts 

Chilean walnuts have been preferred by quite a few buyers but due to the shortage this year, the demand has shifted towards Chinese walnuts. Luckily, there are quite a few kernels with 90% halves available which are quite similar to the Chilean ones in both quality and colours.

Additionally, Chinese walnut suppliers have been able to provide 30mm, 32mm and 34mm+ walnuts with 32mm+ being in the greatest demand.

As for walnut kernels, mostly extra light, light and light amber are imported to Europe and this trend is continuing this season as well. In fact, in August, more than 1000 tonnes of new walnut orders were received which will be delivered by mid-October. For most traders, the quality of the walnut is not an issue- it is actually the size and colour so if any trader plans for new orders, these two things must be considered for delivery agreements.

Other News of the Industry

As mentioned in the Chinese walnuts section, freight costs have been more or less the same. Land freight costs did not change and sea freight costs remained at high levels during the third and fourth quarter of 2021. For example, sea freight to Piraeus is at $8000/20GP, $15000/40GP this quarter even though back in March, it was only about 5000/20GP, 9000/40GP.

Some Turkish traders have been using railroads to save on costs. In fact, it is noted that Morocco has purchased 60 containers for orders. The very first shipments will start by the end of September. At present, Turkey has begun to supply walnuts as well and while there are more details to come out mid-September, no official reports can be provided as of yet.

Similar conditions follow in most Eastern Europe. We expect more information to come out of Ukraine, Turkey, and other countries by the end of this month.