California Walnuts Report 11.09.24

The 2023 crop year began with a record-breaking production of 824,000 tons and a record carry-over of 141,000 tons from the previous season. With this abundant supply, coupled with competition from walnuts grown in other regions like China, Chile, and Eastern Europe, the season opened with prices significantly below the cost of production.

As the 2023 harvest approached, concerns arose in some markets regarding quality, given the subpar 2022 crop. However, an ample water supply and mild summer temperatures during 2023 contributed to producing one of California's highest-quality walnut crops in recent memory. The combination of superior quality and low prices spurred demand in the fall of 2023 and early 2024.

Reflecting on the season, there were strong shipments of both inshell and shelled walnuts to nearly all major markets. Early buyers managed to sell at profitable levels and re-enter the market for additional purchases. Despite this demand, the record supply kept prices from rising significantly at the origin until early 2024. While this will likely result in another unprofitable season for growers, it helped clear inventory ahead of the 2024 harvest.

Today, the California walnut industry is in a much stronger position than in recent years, thanks to several factors:

• The short 2024 Chilean crop is nearly sold out
• Unsold inventory in California is almost nonexistent
• Overseas inventories are much lower than in previous seasons
• Many buyers were unable to secure their needs during the summer of 2024, indicating strong demand as the harvest nears
• Opening prices from California are higher than in recent years, supported by robust demand

However, there are some challenges:

• Opening prices for Chinese walnuts are significantly lower than those for California walnuts. Demand for Chinese walnuts has been strong, particularly in markets that accept their origin, due to lower prices and higher meat yields. We expect this trend to continue in shelling markets.
• There are concerns about the size and quality of the upcoming California crop due to the extreme heat experienced in the growing regions during the summer of 2024. More will be known as the harvest progresses in the coming months.

via Derco Foods