Walnut Market Standoff: India Customs Crackdown Shakes Import Channels

India’s walnut market is currently caught in a crossfire of enforcement, supply risk, and price intrigue following the detention of at least 46 walnut containers by Indian Customs at Nhava Sheva Port. The vessels, hailing from Bandar Abbas in Iran and flagged as Comoros, have sparked a major customs investigation into alleged origin misdeclaration—a move with significant consequences for near-term supply and global trade dynamics. Authorities believe these walnuts, bearing suspicious Chinese markings, were falsely declared as Afghan-origin to exploit zero-duty access under SAFTA (South Asian Free Trade Agreement), sidestepping India’s steep 100% import duty imposed to protect its Kashmir walnut growers. Traders suggest this case is indicative of a broader pattern, where walnuts from the US, Chile, and China are rerouted through Afghanistan or other intermediaries to benefit from preferential tariffs. As the market digests these developments, the immediate halt of 310 containers, and the looming threat of tighter customs scrutiny, is likely to tighten domestic supply and add upward pressure on prices while sowing uncertainty among importers and distributors. The report below unpacks the investigation, price landscape, kernel yield dynamics, and what this means for traders and consumers moving forward.

📈 Prices

Origin	Product Type	Location	FOB Price (EUR/kg)	Previous Price (EUR/kg)	Update Date
China	Light quarter kernels	Dalian	3.30	3.35	2026-02-21
China	Light amber pieces 8-12mm	Dalian	2.25	2.30	2026-02-21
China	Light pieces 8-12mm	Dalian	2.80	2.85	2026-02-21
China	Light broken 4-8mm	Dalian	2.90	2.95	2026-02-21
USA	Light halves (organic, 80%)	London	4.50	4.60	2026-02-21
India	Light halves (organic)	New Delhi	5.30	5.40	2026-02-21

• Kashmir in-shell jumbo: ~USD 5.50/kg equivalent (local retail)
• Other Indian grades: ~USD 4.25/kg equivalent
• Imported Californian/Chilean: USD 6.80–8.50/kg equivalent (retail, depending on grade)

🌍 Supply & Demand Drivers

• Import Disruption: Detainment of 310 containers at Nhava Sheva creates immediate supply constraints for Indian market.
• Duty Arbitrage: Zero-duty benefits under SAFTA incentivized misdeclaration of origin. Large volumes from China, US, and Chile may have been funneled via Afghanistan.
• Enforcement Surge: Alleged USD 6 million duty evasion—expect tighter future customs audits and document scrutiny across all entering walnuts.
• Domestic Protection: With a 100% import duty, Indian policy heavily favors local walnut growers, especially in Kashmir.
• Yield Differential: Imported walnuts (US origin) have up to 450–500g kernel/kg in-shell, well above local grades (~350g/kg), incentivizing preference for imports despite duties.

📊 Fundamentals & Market Structure

• Trade Patterns: Misdeclaration suspected to be widespread, impacting not only walnuts but commodities like arecanut, black cardamom, and garlic.
• No Formal Claims: Importers have yet to claim the seized consignments, reflecting legal risk and trader caution.
• Quality Features: High-yielding, large-kernel imported walnuts see continued demand from premium retail and food service segments.
• Retail Price Dynamics: Despite duties, the superior yield of imported nuts supports a significant retail price premium.

🌦️ Weather & Crop Outlook (Supplemented by Web Data)

• Kashmir: Recent spring brought moderate rainfall; adequate soil moisture conditions favorable for new walnut crop but ongoing security-related labor disruptions pose occasional logistical delays.
• US (California): Early year drought eased; current irrigation optimal, but a late frost is reported to have marginally affected bloom and nut set—possibly trimming yields by 2-3% in affected orchards.
• Chile: Normal weather patterns with stable rainfall; steady yield expectations for 2024 crop.

🌐 Global Production & Stocks Comparison

• India: Kashmir is primary walnut-producing region; 2023/24 crop estimated at 35,000–38,000 tons in-shell (steady YoY; high-quality, lower-yielding).
• US: World’s top walnut exporter; 2023/24 production at 750,000 tons in-shell (California); largest share of premium kernel trade.
• China: World’s largest producer; much of output is lower kernel recovery but high overall tonnage, key in value segments.
• Chile: Emerged as significant exporter to Asia and Europe; ~170,000 tons in-shell for 2023/24 season.

📌 Trading Outlook & Recommendations

• Expect continued tightness in India’s imported walnut supply should customs scrutiny persist.
• Domestic (Kashmir) walnut prices could firm further, especially for premium jumbo and organic segments.
• Importers should ensure robust documentation and verify country of origin to manage seizure risk.
• Watch for ripple effects in Gulf and intermediary ports, with slowdowns likely as vessels face stricter inspection.
• Global price spread likely to remain wide, reflecting duty and risk premium in India, vs lower FOB in China.
• Buyers with flexible supply sources may benefit from diversifying among US, Chilean, and domestic Indian grades to hedge risk.

📆 3-Day Regional Price Forecast

Origin	Location	Current FOB Price (EUR/kg)	Market Sentiment	3-Day Outlook
China	Dalian	2.25–3.30	Soft, slight downward correction	Stable to slightly weaker
India	New Delhi	5.30	Firm, upward bias	Stable to firmer
USA	London	4.50	Steady	Stable