WALNUT MARKET/CROP REPORT

R.L. “Pete” Turner October 30, 2010


WALNUT MARKET/CROP REPORT


CROP:

Due to this years late harvest, it is believed the packers to date have only received about 75 percent of the crop. Of the 25 percent yet to be received, about 80 percent are Chandlers.

Most of the industry feels this year’s almost perfect growing season will produce a “bumper” crop, but not the 510,000 tons projected by The National Agriculture Statistical Service (NASS). Of the major varieties received so far, the Harley and Tulare tonnage appears to be about the same as last year, with the Serr’s and Howards ahead of last years numbers. The big question mark is the Chandlers as we still have about 20 percent of the tonnage yet to come in. Never-the-less, I don’t believe this will be enough to take the crop to NASS’s projection of 510,000 tons.

Most of the industry now believe the crop will be much closer to the Handlers “subjective” estimate of 473,000 tons rather than NASS’s 510,000 tons. Right now, and for a lack of a better number, I’m going with 480,000 tons.

As projected, the crop was at least 15 days later than normal which put a lot of pressure on the growers and hullers to handle the peak harvest period. In spite of this, they seem to have met the challenge as the packers received record tonnage during the first two weeks of October. However, we received up to 2 inches of rain earlier this week and another storm just passed through. This should not have an effect on the quality as the rains are expected to end today making it possible for the growers to get back in the field on Monday.

Also, as projected, the nut size on all varieties was much smaller than normal. This caused most packers to go to a lower percentage of larger sizes for their inshell packs. Thus, most of the Chandlers, Howards and Tulare’s were sold as 70/30 percent Jumbo/Large and the Hartley’s at 80/20 percentage Jumbo/Large. The size issue could cause some problems with some of the early bookings that called for Jumbo size packs.

The good news is the quality of this year’s crop has been excellent with very low defects. The meat yields were higher than normal (even the Harleys) and the percentage of light kernels were also higher than normal.

As expected, September numbers were down with shipments of only 20,828 tons (inshell equivalent) compared to 31,000 tons last year. The low shipments were caused from the late crop and lower than normal carry-over tonnage from the 2009 crop. However, I believe the October shipping numbers will be well over last year’s record of 87,000 tons.



California Walnut Shipments Recap (000)

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

In-shell (lbs.) 7,601 7,601 3,342 3,342 -56.0%

Shelled (lbs.) 24,325 24,325 16,667 16,667 -31.5%

Total Tons
(In-shell eqv.) 31,317 31,317 20,828 20,828 -33.5%

Market:

The industries opening prices apparently stimulated the market as prices started strengthen right from the start. Because of the late harvest, Europe jumped on the early inshell varieties as well as the Harleys in order to make vessel dates.

In addition, China started booking inshell shelling stock (Chandler/Howards/Tulare’s) and anything else that fell off the trees. Turkey followed with heavy bookings on the same shelling varieties. As of this date, trades into both of these markets continue to remain strong, thus creating a temporary inventory shortage, causing most packers to pull off the market. In addition, the packers are concerned about over booking, especially with the crop coming up shorter than expected.

This has created some confusion and disappointment in the domestic market as many buyers felt that pricing would weaken because of the record 510,000 crop. To date, this has not happen and in my opinion, the market will continue to strengthen. I base this assumption on the crop being smaller than the forecast and the extra strong demand coming from the China market.

In addition, two of the largest packers recently opened in Japan at $3.45 for Light Halves and Pieces; and at least one of them withdrew from the market last week. Also, the availability of Hartley’s seem to be getting tight as buyers are now jumping on the smaller sizes in order to meet their commitments.

I am always reluctant to put out current pricing, but here it is anyway:

Light Halves & Pieces $3.45 (opening $2.75)
Jumbo/Large Chandler In-shell $1.70 (opening $1.35)
Jumbo Hartley’s $1.48 (opening $1.25)

Please let me know if you have any questions.