Wednesday, January 31, 2007

Bentzy Klein January 30, 2007



The California Walnut Marketing Board has announced the 2006 crop at 343,844 tons.

As expected, the 2006 walnut crop came in under the official estimate of 350,000 tons. However, what we don’t know is the final kernel yields. Most of the industry is reporting that yields are down about 2% from last year (40.7%), and if this is the case, it helps explain why the industry is short of inventory.

The Walnut Marketing Board announced the December shipments at 29,921 inshell equivalent tons, 2,800 tons more than last year. Inshell shipments were 5.8 million pounds, 0.4 million pounds more than last December. Shelled shipments were 23.3 million pounds, 3.3 million pounds more than last year. Total inshell equivalent year to date shipments were 196,450 tons; 19,186 tons less than last year.

Although the crop was exposed to record temperatures earlier in the year, it did not seem to affect the final quality of the crops. Early varieties (Serr’s, Payne's/Ashley's) appeared to have little damage as were the mid- varieties (Vina’s, Tulare’s, Howard’s). However, the Chandlers were darker than normal and the yields were off as well.

The WMB reported the December 31, 2006 inventory for Inshell* at 96.5 million pounds (39.1 million pounds more than last year) of which 9.0 million is certified. The Shelled* inventory is 127.1 million pounds (30.7 million pounds less than last year) of which 28.7 million is certified.

*Note: It appears that some handlers were confused on what material to report as inshell and what material to report as shelled. The WMB has sent a follow up notice advising the handler how to assign their tonnage to the correct category. In any event, the total inventory tonnage will not change and the majority of the inshell inventory noted above will be diverted to shelled.

The WMB is using a 42.9 percent yield factor (five year average) for the 2006 crop. However, most in the industry believe, the yields are closer to 40.0 percent. After taking the future inshell shipments into account and using a 40.0 percent yield factor, my numbers show that we will be completely out of walnuts shortly and a carry-over of less than 68,000 tons.


The Inshell market remains very firm with the latest trading taking place at $1.07 and higher. Also, it appears that all Inshell, including larges and mediums are basically sold out. Main reason……..the Hartley 2006 crop was only 59,521 tons, down 15 percent from last year (69,000 tons).

The Shelled market has also firmed with recent trading of LHP at $2.85 and higher and CHP trading in the $2.65 range. Again, most handlers have withdrawn from the market on Combo and Baker material and are offering only a limited amount of Light material.

One of the industries main concerns is that some walnut users may come up short and there will not be enough walnut material, (especially smaller product) to cover their requirements.

Please let me know if you have any questions or comments……

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