Monday, November 29, 2010

Walnut Market update

R.L. “Pete” Turner November 24, 2010



It is believed that 95 percent of the 2010 crop has been harvested and delivered to the packers. The other 5 percent is either at the hullers or being held at grower facilities.

The quality of the 2010 crop is well above average with a very high percentage of light material. However, because the trees held a large portion of their second and third sets this year, the walnut sizes are coming in much smaller than normal.

It does not appear that the heavy rains during late harvest had much effect on the quality. Very few walnuts were caught on the ground as most growers rush their harvest in order to beat the rains. The material that did get caught in the rain was mostly assembled in edge-rows, thus, enabling the growers to complete their harvest in between storms. In any event, most post rain walnuts will not be utilized for the inshell market, but will be dispatched to the packers shelling operation.

There is no doubt that the 2010 crop will be larger than last year’s record crop (436,000 tons). The question is…by how much. In the state’s four major growing regions, the tonnage in the south seems to be well ahead of last year’s production. This also seems to be the case in some of the northern growing regions. However, the tonnage from the mid-valley areas seems to be only 8-10 percent ahead of last year’s numbers.

That being said, most industry leaders believe the crop will be closer to 480,000 tons rather than the 510,000 tons forecasted by NASS. However, the final outcome will be whether the Chandlers reach the number previously projected by NASS. My guess, they will not.

October shipments of 94,000 tons were less than the 100,000 tons I forecasted earlier; but still 7,000 tons ahead of last October’s shipments (87,000 tons). So, at the sake of going 0-for 2, I am projecting November shipments at 100,000 tons, 30,000 tons more than last November.

California Walnut Shipments Recap (000)

Month (Oct) 2009/10 Year to Date 2010/11 Year to Date Percent

In-shell (lbs.) 89,106 96,706 100,806 104,148 8.7%

Shelled (lbs.) 37,269 61,594 37,750 54,417 -11.7%

Total Tons 86,712 118,029 93,794 114,622 -2.9%

After some of the most active walnut industry bookings that I have ever experienced, the market now seems to be cooling off. China and Turkey are still booking, but not at previous rates. As an example, approximately 9 million pounds of inshell were shipped to China/Hong Kong at the end of October last year. This year, the shipments are at 27.5 million pound and I expect the November numbers will be similar.

As expected, Inshell Hartley’s to Europe have dropped off, but shelled bookings continue to be active. The Japan and Korea markets continue to book as well as the US domestic markets.

The market is still in a flux as most packers are still off the market. The major reason is that the record bookings in the past 6 weeks have extended their inventory position; and many must hold until they see their final tonnage from the growers.

It is my belief some packers will be coming back on the market shortly, but others will most likely remain off because of booking commitments and limited available inventories.

Limited trades have the Light Halves & Piece market in the $3.95 range and the Combo Halves and Pieces at $3.55 plus. Inshell Jumbo Hartley’s are trading around the $1.60 levels with Jumbo/Larges at $1.55.

Inshell Chandler Jumbo/Large are on both sides of $1.85 with Howard’s and Tulare’s 5-10 cents less.

I believe that the industry will ship more than 60 percent of the crop by the end of December and will have the entire 2010 crop committed shortly there after.

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

My well wishes for the up coming holidays and have a Happy Thanksgiving weekend.


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