Nut Talk

December 15, 2006

WALNUT MARKET/CROP REPORT

CROP:
The Walnut Marketing Board announced the November shipments at 47,004 inshell equivalent tons, 5,054 tons less than last year. Inshell shipments were 16.7 million pounds, 0.4 million pounds less that last October. Shelled shipments were 33.2 million pounds, 2.3 million pounds less than last year. Total inshell equivalent year to date shipments were 166,551 tons; 21,964 tons less than last year.

Please be aware that last year’s shipment numbers have been adjusted to reflect the lower shellout rates (40.7%) than the original 44.5% forecasted shellout rate. As an example, last years November shipments originally indicated we shipped 47,916 tons (inshell equivalent) about the same as this November, however, because of the lower yields; the November 2005 shipments were later adjusted to 52,058 tons.

This year (2006/07) the Walnut Marketing Board is forecasting a 42.9 shellout rate, the average for the last five years. This is 2.2% more than last years final 40.7% yield, however, most of the industry is reporting lower yields from the 2006 crop than last year. If this becomes the case, the shellout rates will once again be adjusted downward.

The final crop tonnage will be out in late January and the majority of the growers/packers believe it will be under the 350,000 ton estimate. This makes the shellout rate situation even more critical as it will also have an impact on the final crop tonnage.

The overall quality of the crop was above average. The expected heavy sunburn damage never happened and the crop yielded above average “lighter“kernel’s and lower than average “darker” kernels. This has been reflected in the market as most packers have withdrawn on both Combo and Baker type material. In addition, it appears that medium and small piece material will also be in short supply.

MARKET:
The Inshell market remains firm with Jumbo trading on both sides of $1.06. I do not see much change in the forward market. The Shelled market is also firm with Chandler LHP trading around the $2.70 levels and medium and smaller pieces five to ten cents higher.

Most packers have withdrawn from the market on Combo and Baker material and the few that still have inventories are asking $2.50 for Combo Halves and Pieces and $2.30 for Baker type products.

I still believe the crop will come up short of the forecast and firmly believe the market will continue to strengthen as we go forward.