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Chilean inshell prices waver as first U.S. new crop deals reported

July 14, 2022

Chilean inshell walnut prices dipped a fraction in the global container market the week ending Thursday amid light activity and few solid inquiries from buyers.

California handlers continued to offer their remaining stocks of current crop at competitive prices and new crop trade began with the first reported deals. 

Stratamarkets assessed CH 30-34 at $2.57/kg FOB, down 2 cents on the week, and CH 34-36 at $3.20/kg FOB, unchanged. The CH 30-34 premium to the item’s nearest U.S equivalent, CH JLIS, rose 5 cents to 28 cents/lb, its highest since the end of April.

US market

New crop activity continued to build up steam even as California handlers focused much of their energy on closing out current crop sales to make way for the new harvest and avoid expensive cold storage costs. New crop activity typically begins at the end of August or early September.

A U.S. packer reported selling a few loads of new crop Non-Chandler kernel material to Europe on Wednesday, the first confirmed new crop deals of 2022. Non-Chandler LHP 20 traded at $2.05/lb FAS, Non-Chandler LHP 40 at $2.30/lb FAS and Non-Chandler LHP 60 at $2.45/lb FAS.

“It’s a fair price to get new crop sales going,” said a trader in the Middle East. 

The U.S. handler said that despite the increasing prospect of a large U.S. crop this year, European buyers were concerned about the continuing devaluation of the euro against the U.S. dollar and were therefore locking in new crop sales without emphasizing near-term deliveries.

“They just want new crop,” the packer said. “They’re saying prices have gone up 12% since the euro devalued against the dollar.” 

Unverified trades for U.S. new crop Chandler JL inshell were reported from $0.85/lb-$0.90/lb FAS with offers at higher levels from $0.95/lb-$1.05/lb FAS during the week. 

Sources said U.S. packers will be keen to lock in a fair amount of inshell sales at more competitive prices this season. Last year, several packers held out on opening offers of up to $1.40/lb FAS for Chandler JL. Sales stalled as a result, and prices plunged to $0.85/lb-$0.95/lb FAS.

The California Walnut Board published its June shipment report on Friday. (See story on page 3.) The report showed strong June exports to Turkey at 4.8 million lbs. 

A U.S. trader said the large shipments to Turkey were driven by price considerations, particularly as the Turkish lira has depreciated dramatically against the U.S. dollar this year and buyers were not prepared to pay large premiums for Chilean inshell.

“[Turkish buyers] like the Chilean quality but not so much the Chilean premiums,” the trader said. “In these circumstances, they found better value in securing much cheaper U.S. product.”

Stratamarkets’ weekly assessment for Chandler JL averaged $0.96/lb FAS U.S. in June, while the assessment for the closest equivalent Chilean product, Chandler 30-34, averaged $2.59/kg ($1.18/lb) FOB Chile. In April, however, Stratamarkets reported a trade for 10 loads of Chandler JL for May/June shipment to Turkey at $0.85/lb FAS.

A subjective estimate of the 2022 U.S. crop is expected to be announced at a meeting of U.S. walnut exporters on July 19.

Chilean market

Chilean handlers reported fewer deals this week as prices of smaller-size inshell categories edged lower and buyers mainly stayed off the market.

Chandler 30-34 traded at $2.67/kg FOB early in the assessment period but was later offered at $2.55/kg FOB and $2.60/kg FOB. Chandler 32-34 was offered at $2.70/kg FOB, 9 cents below Stratamarkets’ previous weekly assessment.

“India is the market that we’re giving the most attention to at the moment,” said one Chilean packer, referring to inshell sales. “But it’s a tough market.” 

While some Chilean packers have insisted their inshell sales programs are progressing in line with expectations, others have expressed worry at low sales to date and a lack of inquiries from key destination markets.

“Turkey is like a closed door to us, and many of my European customers are on holiday or telling me they don’t need to cover yet,” said a second Chilean packer. “We are concerned.” 

Chilean kernel sales are also slow, although a few loads of Chandler LHP 80 for July to October delivery traded early in the week at $7.40/kg ($3.36/lb) FOB. A load of Chandler LHP 40 transacted on Monday at $6.40/kg ($2.90/lb) FOB.

A market source said that while Chilean kernel offers and sales were holding steady, they may come under pressure from European buyers who can afford to wait before purchasing.

“I can’t see how Europe is going to want to pay top dollar to Chile,” he said. “I think the kernel prices there have to give. Maybe not today but let’s see what happens come August.”

Demand

Though European demand perked on Thursday, buying interest from the region has been soft as importers continue to receive delayed containers.

One U.S. packer said he had been informed by one of his customers, a German retailer, that they did not require any new containers of walnuts to ship until the first quarter of next year. 

“They may buy before then,” the packer said. “We’ve been talking to our agent about keeping the pipeline going so there might be some shipments that go out prior to that – maybe November or even December.” 

U.S. September 2021 to June 2022 walnut shipments to Europe were down 15% on the year to 73.1 million lbs, according to California Walnut Board data. Chilean March to May 2022 shipments to the region fell 57% to 2,640 mt (5.8 million lbs), according to data from Chilenut, the Chilean walnut industry association.

Logistical issues continue to impact shipments into Europe. Container ships are backing up outside North Sea ports and German port workers went on strike on Thursday in a dispute over wages, which threatens further to paralyze container operations in major North Sea ports. 

And amid spiraling inflation, market sources said buyers had to manage the fallout from the U.S. dollar’s strength against the euro. The greenback rose to another record high against the common currency of $0.999 on Thursday.

Trading activity in Turkey and the Middle East stalled this week due to the five-day Eid al-Adha religious festival, which began on July 9. 

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