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Walnut prices static as Chilean handlers look to boost sales in Dubai

May 12, 2022

Prices in the global container market for walnuts remained flat in the week to Thursday as Chilean packers sought to boost new crop sales at the INC World Nut and Dried Fruit Congress in Dubai while their U.S. counterparts said they were heavily sold on export-grade material.

Trading activity was minimal, particularly in the days leading up to the industry gathering and amid light inshell demand from Turkey and India.

Market sources said Chinese representation at the conference would be limited due to recent COVID-related lockdowns in China and that Chilean sellers would be keen to boost their sales, which are lagging behind previous years.

“This will be a big week for discussions, and it will be interesting to see how things develop after it,” said one U.S. packer. 

“Certainly, there is going to be some activity.”

Stratamarkets assessed U.S. Chandler JL inshell at $0.95/lb FAS, and Chandler LHP 20 at $2.20/lb FAS, both unchanged on the week. Chilean 30-34 inshell was assessed at $2.58/kg, down  12 cents on the week.

Inshell supply

Chilean new crop inshell continues to trade at a significant premium to U.S. current crop, although the premium fell this week. 

On Thursday, Chile’s Chandler 30-34 inshell price premium to its closest U.S. counterpart, the CH JLIS, fell to 22 cents/lb. The differential has averaged 29 cents/lb since mid-February, when Stratamarkets began tracking prices. 

Several U.S. packers said they’ve been surprised by the strength of the premium, with one packer saying he could have used the premiums to lift the price of his own stock if he wasn’t already sold.  

A Chilean handler present in Dubai said new sales there were being activated at similar levels to past deals. Chandler 30-34 traded in the $2.60-$2.70/kg FOB range during the week.

Another handler said he received bids for $2.70/kg FOB for Chandler 32-34 but declined them, believing $2.80/kg FOB was a fairer reflection of value. Larger-sized Chilean Chandler 34-36 traded Friday at slightly higher levels of $3.20/kg FOB and $3.25/kg FOB.

One trader said the Dubai event would provide a good platform for Chilean sellers to boost their inshell sales to India “and perhaps push the prices up a little,” he said. 

There were no reported deals for U.S. inshell products. Market participants said that while some smaller handlers may be looking to quickly offload inshell material in warehouses due to the warmer weather in California, larger handlers are mostly sold.

Kernel supply

Sellers said prices for U.S. shelled Chandler products leveled this week. Handlers with higher half-count products on their books are looking for a price of $3/lb FAS for Chandler LHP 80 due to its waning availability.

“Sellers of LHP 80 aren’t really motivated to sell at this time,” said one packer. “There’s always a home for that product and the feeling is that the $3/lb price will continue to be there for the next couple of months.”

The California Walnut Board’s latest shipment report published Tuesday was mixed, revealing an uptick in monthly shipments but lower new monthly sales (see news story on page 2).

Demand

The stark decline in Turkish demand this year has been a key driver in pulling prices down, as buyers in the country contend with the depreciation of the lira against the dollar, which has increased their price sensitivity.

Chilean Chandler 30+ material is available at $3.20/kg CIF Mersin. This category is priced at a premium to 30-34 as it consists of around 15% 30-32, 25% 32-34, and the remainder of larger 34+ nuts. Current freight rates from Chile to Turkey are estimated at 35 cents/kg (16 cents/lb).

As a result, some Turkish buyers appear to have purchased cheaper, rain-damaged inshell stock from the U.S. recently, although this interest may have since shifted to China, given that Xin 185 30+ inshell is available at $2.65/kg ($1.20/lb) FOB China.

A trader in Turkey said the financial constraints combined with high freight rates may have also been a factor in buyers of inshell converting to purchases of lower-quality, color-affected kernels from China.

“This material is similar to U.S. Combo quality,” he said.

The trader added that the cost of importing premium-priced Chilean inshell and cracking it into Extra Light/Light 90% Halves was around $2/kg more expensive than Chinese origin products of this category available on a Delivered Duty Paid basis in Mersin.

Buyers in Turkey active in the export market for Chilean product appear to be targeting purchases to resell abroad rather than catering to the domestic market. Current Chilean offers may be considered too high for them.

Usually in August and September there is a shortage of walnuts in the market because of the transition from Chile to California, but it seems that won’t be the case this year,” the trader said. “There are a lot of options for walnut availability. There are stocks in Mersin of Chinese and U.S. kernels and also from Ukraine and Kyrgyzstan.”

However, he added that in comparison to other origins, stocks of U.S. Chandler inshell in bonded warehouses in Mersin had been depleted, and it was still unknown whether one large Turkish buyer had product in cold storage available for resell.

Sources in the U.A.E. confirmed walnut stocks at manufacturers and retailers had reduced significantly due to the recent post-Ramadan celebrations and it was likely that traders would be looking to restock.

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