Walnut Market Report, March 2023

The 2022/23 walnut supply in California is estimated to be 885,839 inshell tons, with 137,969 carry-in from the previous season and 747,870 crop receipts to date. As of March 31, there were 463,064 inshell tons of shipments, leaving 422,775 inshell tons of remaining unshipped supply. Of the remaining supply, 171,495 inshell tons were committed as of March 31, leaving 251,280 inshell tons of remaining supply available for sale.

In March, inshell walnut shipments decreased by 8% compared to March 2022, while shelled walnut shipments increased by 4%. The season-to-date inshell and shelled walnut shipments increased by 4% and 3%, respectively, compared to the same period last season.
The highest increase in March inshell shipments was seen in the UAE (+85%), Turkey (+17%), Algeria (+38%), and India (+66%). Meanwhile, the highest increase in shelled shipments was seen in the US domestic market (+43%).

The future sales commitments are estimated at 209,000 inshell equivalent tons, using a shellout rate of 40%. This figure is lower than normal due to the high level of defects and darker color in this season's crop. The estimated new sales during March were also strong at 115,000 inshell equivalent tons.

Looking ahead, a USDA purchase program is expected to purchase up to 70,000 inshell equivalent tons of kernels from California between May-December. The volume and timing of the program have not yet been announced, but it is expected to boost sales in California.

The Chilean walnut harvest is expected to yield a record production of 190,000+ inshell tons. Reports from Chile indicate lower than expected volume of Serr variety, while Chandler variety harvest has just begun with early reports indicating good volume and good color and yield.
The Chilean market opened in February during Gulfood, with strong early demand seen from buyers in India, Morocco, and Russia. Buyers in other markets are slowly becoming more active as harvest season progresses.

The challenges faced by the California walnut industry in the 2022 season include higher levels of defects and darker color in the crop, historically low pricing to growers, inflationary pressures, sharp currency movements, and fallout from the war in Ukraine.

However, strong shipments in recent months and a pending purchase of kernels from the USDA have improved the supply situation in California.

Buyers have been active in recent months, locking in prices well below the cost of production. These lower prices have resonated well in the US domestic market, where demand is showing signs of improvement. The goal is to build demand now, which can be maintained as supply and demand work their way into balance again.

Early demand for Chilean walnuts has been good, and buyers are hungry for the high quality walnuts Chile is known for. Given the high quality being reported and the relatively attractive pricing in the industry today, steady demand is anticipated throughout the Chilean season.