Walnut Market Tightens as U.S. In‑Shell Exports Surge and China Prices Firm

U.S. in-shell walnut shipments are running at more than double last season, driven by robust export demand into Turkey, the Middle East and Africa, while European offtake softens and prices in China trend firmer. Kernel shipments are also rising, but more moderately, keeping product broadly available and capping any sharp price escalation for now. The current walnut season is defined by a powerful export-led recovery in U.S. in-shell movement, with cumulative shipments approaching 300 million pounds. Strong buying from Turkey and several Middle Eastern and North African destinations has absorbed much of the heavy U.S. supply overhang, even as demand from Europe and India lags. At the same time, kernel flows continue to grow steadily, and spot prices for Chinese and U.S. kernels are stable to slightly firm, suggesting a market that is tightening gradually rather than overheating.

Prices

Chinese and U.S. walnut kernel prices in EUR remain broadly stable compared with earlier in July, with no major week-on-week moves despite strong in-shell export dynamics. Firmer local prices reported in China are consistent with solid export demand and seasonal positioning ahead of the new crop, but current quotes suggest only moderate upward pressure so far.

Given the pronounced increase in in-shell exports from California, the current stability in kernel prices suggests that inventories remain comfortable and that buyers are not yet competing aggressively for supply. However, firmer indications in China point to limited downside near term, especially for better light grades.

Supply & Demand

U.S. in-shell walnut shipments in May surged to 12,862 pounds, more than doubling the 5,558 pounds shipped a year earlier. Exports were the main driver, rising from 5,229 to 12,498 pounds, while domestic in-shell movement grew by about 11% to 364 pounds, highlighting the dominance of international demand in clearing the crop.

Season-to-date, cumulative in-shell shipments have reached nearly 300 million pounds, more than twice last year’s volume. Export in-shell shipments are up 114%, while domestic shipments are 47% higher, signaling a broad-based improvement in offtake but with clear export leadership. Turkey has emerged as a key growth engine with nearly fivefold higher volumes, and shipments to the Middle East and Africa have jumped by 395%, from 37 million to 183 million pounds.

Within the MENA region, the United Arab Emirates, Algeria, Lebanon, Iraq and Morocco have all recorded strong demand gains, reflecting both restocking and potentially some trade diversion away from other origins. In contrast, European demand for U.S. in-shell walnuts is slightly weaker: total shipments to Europe are down around 5%, from 55.8 to 53.1 million pounds, with Spain off 13% but Italy up 15%, suggesting a mixed picture within the bloc.

In Asia, Indian purchases of in-shell walnuts are down roughly 10%, yet total Asia-Pacific exports are up 5% to 37 million pounds thanks to stronger shipments to other destinations, including an 88% increase to Vietnam. North American cross-border trade has also gained momentum, with shipments up 44% to 15.8 million pounds, supporting regional balancing of supply.

Kernel shipments are growing, but at a more moderate pace than in-shell. May kernel exports reached 39,267 pounds, up 23% year-on-year from 31,815 pounds. Exported kernels increased by 41%, while domestic kernel movement rose only 2%, confirming that the international market is absorbing most of the growth. Europe remains the largest outlet for U.S. walnut kernels, partly offsetting its softer demand for in-shell product.

Fundamentals & Weather

The shipment data point to a marked tightening in U.S. in-shell availability versus last year, although overall walnut supply remains ample when kernels are included. Elevated in-shell purchase commitments reported for June and solid kernel export volumes underline a healthier demand environment than in the previous season, when inventories built sharply.

Turkey’s import needs remain structurally high despite recent adjustments in customs duties, and current trade flows from the United States, Chile and other origins emphasize the country’s role as a regional hub for nut consumption and re-exports. Latest trade data confirm that Turkey continues to source significant volumes of in-shell walnuts from multiple suppliers, supporting the strong shipment growth seen this season.

Weather in California’s Central Valley is seasonally hot and mostly favorable for walnut orchards. Local forecasts point to typical July heat, with the potential for hotter-than-normal conditions and episodes of extreme heat into early August, reflecting a generally warm, dry summer pattern.

In the near term, this weather outlook supports good kernel fill and quality, though extended extreme heat spikes could stress trees and marginally affect yields in less well-irrigated blocks. Over a longer horizon, ongoing climate variability and increased frequency of heat events remain a structural risk for California’s tree nut sector, including walnuts.

4–8 Week Outlook & Trading Views

With in-shell shipments already more than double last year and export demand from MENA and parts of Asia accelerating, the walnut market is shifting from oversupplied to more balanced. Nevertheless, continued growth in kernel output and currently stable prices indicate that the transition is gradual, giving buyers a limited window to secure forward cover at historically attractive levels.

• Importers in MENA and Turkey: Consider extending coverage modestly into Q4 for in-shell and key kernel grades, as strong current buying and tighter U.S. exportable surplus limit downside and raise the risk of later-season firming.
• European buyers: With shipments slightly lower and good kernel availability, maintain a staggered purchasing strategy. Focus on light halves and quarters where Chinese and U.S. offers remain stable in EUR, but be prepared for mild firmness if U.S. export momentum persists.
• Asian buyers (incl. India and Vietnam): India’s reduced purchases and Vietnam’s sharp increase suggest shifting regional trade flows; buyers with flexible origin preferences can use this to negotiate, but should not rely on substantially lower prices given firmer indications in China.
• Producers and handlers: Given improved shipment pace and stable prices, prioritize sales into active destinations (Turkey, MENA, Vietnam) while monitoring European demand and currency developments. Holding excessive old-crop in expectation of a major rally appears risky at this stage.

Short-Term 3-Day Price Indication (Directional)

• FOB Dalian (CN kernels, main grades): Sideways to slightly firm in EUR over the next three days, supported by steady export demand and firm domestic indications.
• FOB London (US organic halves): Sideways; strong U.S. shipment data is balanced by still-comfortable kernel inventories, limiting near-term upside.
• FOB New Delhi (IN organic halves): Sideways with a mild firm bias, as India trims in-shell imports but maintains demand for premium kernel segments.