Major Customs Scandal Shakes Walnut Market: Origin Fraud & Trade Fallout

The global walnut market has been jolted by a high-profile customs investigation in India, which centers on a massive shipment detained for alleged misdeclaration of origin. Indian authorities have intercepted a Comoros-flagged vessel, WIV Reyfa, at Nhava Sheva port, suspending 309 containers—primarily loaded with walnuts—amid suspicions that the products’ origins had been falsified to exploit zero-duty benefits under SAFTA (South Asia Free Trade Agreement). Such incidents not only drag immediate trade into uncertainty but also threaten to reshape verification procedures and the regulatory landscape for walnut imports far beyond India. At the core of the scandal is the suspected use of forged documents attributing walnut origins to Afghanistan, which would allow importers to bypass substantial customs duties—an evasion estimated at around $6 million. The ongoing detention and legal action signal a period of tighter scrutiny, logistical delays, and increased costs, especially for products from landlocked nations reliant on complex, multi-country routes. As Indian authorities push for stricter field checks and the market recalibrates, both exporters and buyers must now grapple with heightened compliance risks, the specter of retroactive duty claims, and potential shifts in trade routes, particularly for Iranian, Afghan, and third-country walnut flows. This situation is likely to have immediate effects on supply availability in India, price volatility, and trade sentiment across Asia and Europe.

📈 Prices: Latest Walnut Market Levels

Product	Origin	Location	Type / Grade	Organic	Price (EUR/kg) FOB	Last Update	Market Sentiment
Walnut kernels	China	Dalian	Light quarter	No	3.35	2026-02-14	Neutral
Walnut kernels	China	Dalian	Light amber pieces, 8-12 mm	No	2.30	2026-02-14	Neutral
Walnut kernels	China	Dalian	Light broken, 4-8 mm	No	2.95	2026-02-14	Neutral
Walnut kernels	China	Dalian	Light pieces, 8-12 mm	No	2.85	2026-02-14	Neutral
Walnut kernels	USA	London	Light halves (80%)	Yes	4.60	2026-02-14	Neutral
Walnut kernels	India	New Delhi	Light halves	Yes	5.40	2026-02-14	Uncertain

🌍 Supply & Demand: Impact of Customs Scandal

• Supply Shock in India: Detention of 309 containers introduces short-term supply risk—India’s market remains dependent on imported walnuts, with Afghanistan a vital source.
• Stricter Compliance: Heightened scrutiny and additional documentation requirements are likely for all imports under SAFTA, potentially causing broader delays and administrative overheads.
• Legal Uncertainty: Importers now must post bank guarantees or face delayed clearances, reducing liquidity and raising costs.
• Market Reassessment: Buyers may temporarily shift preference to U.S. and Chinese walnut origins to avoid risk, supporting stable pricing ex-China and ex-US for now.

📊 Fundamentals: Market Drivers & Key Data

• Regulatory Driver: Investigation triggered by intelligence reports and large-scale irregularities in transit and shipping documentation.
• Financial Impact: Estimated $6 million in evaded duties under investigation; potential for retroactive claims could further disrupt supply chains.
• Broader Impact: Potential tightening of country-of-origin rules, especially for dry fruit products moving through Iranian, Afghan, and UAE transit points.
• Historical Context: Indian demand surges seasonally, but extended customs delays and legal battles could dampen imports, with possible implications for Ramadan and festival demand spikes.

🌦️ Weather & Regional Outlook

• Iran & Afghanistan: Current disruption not weather-induced but administrative; continued port detentions likely to outweigh any short-term meteorological influence on pricing or availability.
• China & US: No significant adverse weather reported for key growing regions, supporting stable outturns and consistent export flows.

🌐 Production & Stocks: Country Snapshot

Country	Production Share (%)	Main Export Market	Stock Situation
USA	~33	EU, India, China	Stable
China	~49	Asia, EU	Stable/Soft
Iran	~11	India	Disrupted (current event)
Afghanistan	~2-3	India	Stable, but at risk of stricter checks

📆 Trading Outlook & Recommendations

• Monitor customs and legal developments in India—resolution or escalation will reshape immediate South Asian supply flows.
• Expect delays or re-routing for all Afghan/Iranian cargos via non-standard ports; premiums may develop for guaranteed-origin US and Chinese product.
• Indian importers and end buyers should factor potential retroactive duties and additional paperwork into landed cost calculations.
• Watch for policy responses from Indian authorities—further tightening will extend risk to other dry fruit categories.
• Opportunistic buyers in Middle East/EU may find softer deals on Chinese and US supply while Indian market clears backlog/legal risk.

🔍 3-Day Price Forecast – Key Exchanges

Origin/Exchange	Current (EUR/kg FOB)	3-Day Forecast	Trend
China (Dalian)	2.30 – 3.35	Unchanged / Mildly Firm	➡️
USA (London)	4.60	Stable	➡️
India (New Delhi)	5.40	Uncertain, potential upside risk	⚠️