Walnut Market Firms as US In‑Shell Exports Surge and Kernels Hold Steady
US walnut shipments surge on export demand to Turkey, MENA and Asia, tightening in-shell supply while kernel prices from China, India and the US remain broadly steady.
Prices
FOB kernel prices in early July indicate a broadly stable but slightly firmer tone compared with mid-June, especially for Chinese origin product:
These stable kernel price levels align with industry commentary that today’s low-to-middling prices are attracting demand and allowing surplus stocks to be worked down, without yet triggering a sharp bullish break.
Supply & Demand
The US walnut sector is experiencing a notable acceleration in shipments during the 2025/26 marketing year. May in-shell shipments reached 12,862 tonnes, more than doubling last year’s 5,558 tonnes, while cumulative shipments for the season are approaching 300 million pounds on an in-shell basis. Export volumes are up by 114%, with domestic shipments higher by 47%, underlining healthy demand in both channels.
Turkey has emerged as one of the fastest-growing outlets, with shipments nearly fivefold higher this season. Exports to the Middle East and Africa have surged by around 395%, led by stronger buying from the UAE, Algeria, Lebanon, Iraq and Morocco. By contrast, exports to India have slipped roughly 10%, and European demand has softened slightly, signalling a redistribution of trade flows rather than a loss of global demand. This pattern is consistent with broader data showing strong year-on-year growth in total California walnut shipments through May.
Despite earlier concerns about structural oversupply in California, the combination of aggressive export sales and resilient domestic use is helping to move inventories. The industry expects exports to remain supportive over the coming months, with diversified global demand and improved logistics keeping the US walnut market relatively firm into the end of the current marketing season. Nevertheless, kernel trade remains competitive, as low-cost origins such as China and Eastern Europe continue to target price-sensitive destinations.
Weather & Crop Outlook
Weather in California’s Central Valley, the core US walnut region, is entering a hotter phase. Seasonal outlooks point to an elevated risk of extreme heat across much of the western United States through mid- to late July, with above-normal temperatures favoured in California.
So far, no major adverse weather events have been reported that would materially alter expectations for the 2026/27 crop. Industry assessments still anticipate a sizeable harvest following the large 2025 crop, though extreme heat during nut fill could trim yield or affect kernel quality if it intensifies or persists. At this stage, weather is a risk factor to watch rather than an immediate bullish trigger, but it could become price-supportive if stress is confirmed later in July.
Fundamentals & Market Balance
Global walnut supply remains ample. California’s 2025 in-shell production finished around 809,000 short tons, and international projections for 2025/26 point to a further increase in world output, led by higher crops in the USA, Chile and several European origins. However, the rapid pace of US shipments this season is helping to prevent a burdensome carryout.
On the demand side, the role of traditional growth markets is shifting. India’s imports of US walnuts have weakened by around 10% this season, partly due to price competition from other origins and lingering tariff and logistics frictions, even as overall Indian walnut imports diversify across suppliers. Meanwhile, the Middle East, North Africa and Turkey have taken over as the main incremental buyers of US in-shell, while Europe shows slightly softer volumes but still represents a core destination, particularly for kernels.
Overall, fundamentals currently resemble a market transitioning from oversupply towards better balance: stocks are being drawn down by strong exports, yet global production capacity remains high. This creates a floor under prices but also caps the upside unless weather or policy shocks emerge.
Trading Outlook
- Short-term (next 4–6 weeks): Expect a firm-to-sideways tone in kernel prices, with in-shell premiums supported by strong export demand to Turkey and MENA. Buyers can still secure coverage at historically attractive levels, but the days of outright distressed pricing appear to be passing.
- Buyers: Food manufacturers and importers with Q4 2026 and early-2027 needs may consider layering in additional cover, particularly for higher-quality US and organic product, before any weather-related risk premium is priced in.
- Sellers: US handlers should continue to prioritise high-demand destinations in Turkey, the Gulf and North Africa, while monitoring currency moves and freight to keep US origin competitive against Chinese and Eastern European kernels.
- Risk factors: A pronounced heatwave during the critical development phase in California, renewed logistics bottlenecks, or trade policy shifts in India or the EU could quickly tighten availability or redirect flows, adding volatility to both in-shell and kernel markets.
3-Day Directional Outlook (EUR-based)
- Chinese FOB kernels (Dalian, key grades): Stable to marginally firmer; offers expected to hold within ±1–2% of current levels over the next three trading days as buying interest remains cautious but steady.
- US and Indian premium kernels (FOB Europe / India): Largely steady with a mild upward bias, especially for organic and top-colour grades, supported by strong export shipments and limited seller pressure.
- US in-shell (export reference, EUR equivalent): Firm; tight nearby availability and strong demand from Turkey and MENA suggest little downside in the immediate term, with modest upside possible if fresh tenders emerge.