Walnut Market Tightens as US In‑Shell Exports Surge to Turkey and MENA
US in-shell walnut exports to Turkey and MENA have surged, tightening supply while kernel prices hold steady. Concise outlook, price view and trading ideas.
Prices
Reported kernel offers in late July point to a broadly stable price environment despite strong shipment growth. Chinese FOB Dalian prices for conventional walnut kernels are holding flat over recent weeks at roughly EUR 2.10–2.20/kg for light amber pieces and around EUR 2.60–2.75/kg for light pieces (8–12 mm), with light quarters near EUR 3.00–3.50/kg, depending on specification and lot size. Premium organic light halves from the US and India are priced substantially higher, around EUR 4.80–5.60/kg FOB equivalent.
The absence of week-on-week price movement, combined with sharply higher US in-shell shipments, suggests that the market is absorbing increased physical flows without immediate price spikes. However, firmer domestic prices in China for kernels and improved global utilization of US stocks point to reduced downside risk and a gradually rising price floor, especially for higher-quality grades and organic product.
Supply & Demand
US in-shell supply is being drawn down rapidly by exports. In May, total US in-shell shipments reached 12.862 million pounds, more than double the 5.558 million pounds recorded a year earlier, with exports at 12.498 million pounds versus 5.229 million pounds previously. Domestic in-shell use also improved by around 11%, but the clear driver is foreign demand. Cumulatively, in-shell shipments since season start are close to 300 million pounds, more than twice last year’s level, with exports up 114% and domestic shipments 47% higher.
Turkey has emerged as the pivotal in-shell destination, with volumes almost five times higher than last season. The broader West Asia and Africa region has absorbed roughly 183 million pounds so far, up nearly 395% from about 37 million pounds, with the UAE, Algeria, Lebanon, Iraq and Morocco all reporting strong growth. This sharp regional concentration increases exposure to policy or currency shocks in these markets, but for now, it is underpinning a very tight export balance for US in-shell product.
On the kernel side, growth is more measured but still positive. May kernel shipments reached 39.267 million pounds, up 23% year-on-year. Exports advanced by 41% while domestic kernel shipments rose only 2%, underscoring that the strongest incremental demand remains offshore. Europe continues to dominate kernel offtake, with season-to-date shipments up 24% to 168.9 million pounds. Germany is particularly robust at +32%, while Spain, the Netherlands, the UK and Italy also expanded, helping diversify demand away from pockets of weakness in some other European and Asian destinations.
Fundamentals & Weather
Fundamentals for walnuts are transitioning from oversupply to a more balanced, mildly supportive stance. Rapid shipment growth, especially for in-shell product, is reducing burdensome stocks built up in previous seasons. Market reports indicate that combined shipped and committed volumes now cover a very high share of the 2025/26 crop, leaving less uncommitted inventory heading into the next harvest. At the same time, China, a major producer and consumer, has seen higher kernel prices during the reporting period, which supports export values and discourages aggressive discounting.
Weather is an emerging watchpoint. Short- and medium-range forecasts signal elevated heat risk across California’s Central Valley through the coming weeks, with above-normal temperatures and limited rainfall expected. While the main walnut crop has already set, prolonged heat waves and potential water constraints could affect kernel fill and quality for the upcoming 2026/27 crop. Any confirmation of yield pressure would reinforce the constructive tone already visible from shipment data and firmer Chinese prices.
Trading Outlook
- Importers in Turkey, MENA and West Asia: With US in-shell exports to the region already up nearly fourfold to fivefold and stocks tightening, consider extending coverage for Q4 2026–Q1 2027, particularly for US in-shell, before potential weather or currency volatility adds a risk premium.
- European kernel buyers: Given steady EUR kernel prices and solid yet not explosive export growth, staged purchasing (layering small volumes over the next 1–2 months) appears prudent, with emphasis on higher-quality US and European kernels where availability could tighten first.
- Chinese and Asian buyers: With domestic Chinese kernel prices firmer and US in-shell demand strong, downside price risk looks limited. Buyers with flexible origin strategies may still find relative value in certain Chinese kernel grades, but should avoid overreliance on last-minute spot procurement.
- Producers and handlers: The current balance argues for disciplined sales rather than aggressive discounting. Maintaining some inventory optionality into the main Northern Hemisphere buying period could pay off if California weather issues or further regional demand growth materialize.
3-Day Price Direction Outlook (EUR Basis)
- FOB China kernels (Dalian): Sideways; high liquidity and stable offers suggest only minor intraweek adjustments.
- FOB US/Europe kernels: Sideways to marginally firmer; strong shipment data and firm Chinese prices support a slightly positive bias.
- US in-shell export market: Firm; elevated export demand, especially from Turkey and MENA, should keep in-shell values under upward pressure, even if quoted levels do not move sharply within the next three days.