As California readies for harvest, US inshell prices show little change

August 4, 2022

U.S. origin walnut inshell prices in the global market were stable in the week to Thursday amid tepid demand while low half-count kernels firmed as the industry gears up to ship new crop next month.

Stratamarkets assessed Chandler JL inshell at $0.86/lb FAS, unchanged on the week, and Chandler LHP 20 at $2.05/lb FAS, up 12 cents on the week.

US market

Offers for U.S. origin new crop Chandler JL inshell remained in the $0.85-$0.95/lb FAS range, as handlers attempt to build a competitive opening position for the new season.

Nine loads of Chandler JL for October-December shipment traded Tuesday at $0.83/lb FOB, while another consignment of the item was heard sold to a Chinese buyer at $0.88/lb FAS.

“The packer wanted 95 cents, the buyer bid 80 cents and it ended up at 88 cents because the packer had delayed shipment of the last crop,” a market source said.

U.S. opening prices for inshell are lower than last year, which sources say is necessary to compete with exports from China in key markets such as Turkey, India, and Europe, where the near-term demand picture is uncertain.

“The current 80-cent range is really competitive with China on an inshell commodity basis,” a U.S. packer said. “It seems to be the realm where things will get going.”

Although price signals for Chinese new crop inshell have been limited, Xin 185 30+ was heard offered at $2.20/kg ($1/lb) FOB China.

Californian packers are keen to learn how the Chinese 2022 walnut crop is progressing. An initial estimate announced in May at the INC World Nut and Dried Fruit Congress put the crop at 1.4 million metric tons (1.543 million short tons), but sources say more concrete projections will not arrive until the end of August or early September.

U.S. Chandler JL new crop was offered in India at $0.95/lb CIF. Sources said the cost of U.S. West Coast-India freight averages 8 cents/lb, but current logistics problems that could delay vessels by weeks or even months further complicate the strategy of offering walnuts on a delivered basis.

“There are some cheaper rates into [India] but they may be somewhat unreliable in terms of being able to get equipment bookings,” said a U.S. packer. “Do you pay 5-6 cents and roll the dice on a possibly unreliable booking, or do you pay a premium for a more reputable shipper?”

In the kernel market, offers for new crop Chandler LHP 20 were stable at $2.15/lb FAS for October-November shipment, but buying interest firmed with a bid for J-spec material tabled at $2.10/lb FAS. Offers for new crop Chandler LHP 80 edged down 5 cents to $2.70/lb FAS.

One European buyer said he was offered U.S. origin 2021 crop kernels at reduced prices because some packers were emptying their warehouses ahead of harvest. He said a few loads of Chandler LHP 80 was offered to him at $2.35/lb FAS but he declined the offer due to the surplus in the local market.

“If you look, all over Europe, warehouses are full,” he said.

Chilean market

Activity in the Chilean market for inshell and kernels slowed with few sales reported during the week. Chilean packers said they are now at the tail-end of their inshell sales for the season with one packer estimating that Chile is more than 80% sold.

As a result, Chilean inshell prices are coming under pressure. Stratamarkets assessed Chandler 30-34 inshell at $2.49/kg FOB, down 10 cents on the week, and Chandler 34-36 at $3.04/kg FOB, down 14 cents. The Chandler 30-34 premium to the item’s nearest U.S equivalent, Chandler JL, fell 5 cents on the week to 27 cents/lb, a four-week low.

Chandler 30-34 is currently offered to Indian buyers at $2.50/lb FOB, while Chandler 34-36 is available at $3.05/lb FAS.

One Chilean packer who said he had completed his inshell sales for the year said the season has been more complicated due to less demand, freight hold-ups, and buyers’ lower price expectations.

With market prices slipping, he said his company had to renegotiate a price reduction on an earlier contract signed with an Indian buyer. “In our case, this is the first time we are dealing with that,” he added.

Chile is now transitioning to focus on kernel sales but the main markets in Europe and the Middle East are a challenge, sources said, because warehouses have high inventory levels of several tree nuts and dried fruit items and finding storage space for incoming shipments is difficult.

Ukrainian market

The ongoing war in Ukraine has raised questions over whether the country will manage to harvest and ship its crop this year.

However, a Ukraine grower-packer said that with the bulk of the country’s production and operations located in the west of the country, there was less impact from the conflict on day-to-day operations than originally feared. He said the main problem was the rising cost of logistics, with growers restricted to using domestic transport firms for trucking their export material out of the country.

“European logistics firms can’t come to Ukraine due to the war,” he said. “Their insurance won’t cover this.”

He said his company’s 2022 output had been slashed by around 40% due to a period of heavy frost during bloom earlier in the year.

Ukrainian new crop offers for Chandler 32-34 inshell shipping in the second half of October have been tabled at Eur 3.30/kg ($3.36/kg) FCA Europe. While the price is a considerable premium to U.S. and Chinese inshell, the key advantage that Ukrainian shippers hold is their new crop can be delivered in time for peak European Christmas demand.

Japanese market

Japanese kernel buyers typically start their new crop inquiries with some vigor at this time of year, but market sources said high inventories and the yen’s weakness against the U.S. dollar has slowed business.

The Japanese yen fell to a 20-year low of JPY 138 against the dollar in mid-July although it has since rallied back to JPY 134 on Thursday.

“The yen-to-dollar exchange is an automatic 30% price increase for Japanese buyers,” said a U.S trader. “They’re being cautious, and many say they’re covered until January.”

A second U.S. trader said Japanese buyers were receiving offers of $2.20/lb FAS for Chandler LHP 20 J Spec “but they’re willing to wait and see how harvest goes and are bidding below this price; some say $2-$2.10/lb is their target.”