WALNUT MARKET/CROP REPORT

R.L. “Pete” Turner May 25, 2009

WALNUT MARKET/CROP REPORT

CROP:

In my February walnut market/crop report I mention that the official California 2008 crop received by the Handlers was established at a record 434,000 tons; 79,000 tons more than the previous largest crop (2005). I believe I also stated that due to world financial mess and the by far largest crop in history, we would have plenty of walnuts available for a long time. Well….I’m 0 for 3!! I not only missed with my 2008 crop estimated by 80,000 tons, the world financial situation was short lived (at least for walnuts), and now, it looks like we will basically be out of walnuts by the new 2009 crop harvest.

It’s amazing what five months of record shipments will do for an industry. Especially, when we have a shipping month like the one we had in April. Most of this record shipping activity can be attributed to low pricing and a short China crop.

The California Walnut Board announced the April shipments at 40,585 inshell equivalent tons; 20,145 tons more than last year. Inshell shipments were 19.7 million pounds, compared to 1.7 million pounds last April. Shelled shipments were 26.7 million pounds, 9.8 million pounds more than last year. Total inshell equivalent year to date shipments are 290,288 tons: compared to 271,591 last year (up 7%).

Everyone in the industry was surprised by the April shipments which was the largest shipping month since October 2008 and the second largest shipping month since November 2007. And these numbers do not include the first flight (10.5 million pounds shelled walnuts) for the USDA School Lunch Program which is scheduled to start shipping in July and ending in October. Thus, we can expect the heavy monthly shipments to continue right up to new crop.

It is still too early to predict the 2009 crop, but industry leaders believe it will be significantly less than the 2008 crop. The Handlers will have their “subjective” estimate in late July, but right now, many believe it will be 350,000 to 375,000 tons.

Market:

The past several months record shipments have greatly reduced inventories, especially Chandlers and Hartley’s; which have basically sold off. The prices for Chandler LHP were $1.85 in early April with recent trades taken place at $2.25. Now that the Chandlers are gone, regular Light material is also fading fast. Regular LHP have jumped from $1.65 last month to $2.00 this week and Combo material is following the same path.

Jumbo Hartley’s that were selling at $0.85 in late March and are now demanding somewhere around $1.25. Again, that is if you can get them. This being said, I am sure there may be some packers offering lower pricing, however, I am just not aware of them.

The out look on the forward market is a lot different than a few months ago. It appears that the heavy demand for walnuts will continue and will most likely see continued strengthening of the market. However, I do not believe we will see prices reach the levels we experienced last year.

The walnut health message continues to expand as new studies show even more health benefits from eating walnuts. The most recent is from a study showing that walnuts have reduced the occurrence of breast cancer in mice. More on this later.

Please let me know if you have any questions or comment.

Regards,

Pete