Walnuts: US Shipment Surge Reshapes Global Trade Flows and Supports Prices

US walnut shipments have surged this season, driven by exceptionally strong export demand to Turkey, the Middle East/Africa and Europe, tightening available supplies and lending support to international prices. Robust overseas buying has more than offset weaker demand in a few established markets such as India and parts of Southern Europe. Cumulative US in-shell shipments have more than doubled versus last season, while kernel exports also posted solid growth. At the same time, Chinese walnut kernel prices have strengthened and recent EUR-denominated offers show a stable to firm tone, suggesting downside for kernel prices is limited unless export momentum cools.

Prices

Recent indicative offers (FOB, converted approximately to EUR) point to a steady price environment for walnut kernels: Price stability over July, combined with stronger Chinese kernel values and tightness in exportable US in-shell supplies, indicates a balanced to slightly firm market. Any further upside will depend on whether current export momentum persists into the new crop marketing period.

Supply & Demand

• US in-shell shipments: May in-shell shipments reached 12,862 pounds, more than double May 2025 levels (5,558 pounds). Exports were the key driver, jumping to 12,498 pounds from 5,229 pounds, while domestic volumes rose 11% to 364 pounds.
• Cumulative in-shell movement: Season-to-date in-shell shipments have more than doubled to nearly 300 million pounds. Exports are up 114%, with domestic movement increasing 47%, signaling a sharp drawdown in available US in-shell stocks.
• Turkey and MENA as growth engines: Turkey has emerged as a major destination, with shipments nearly five times last season's volume. Exports to the Middle East and Africa surged 395%, from around 37 million to 183 million pounds, with strong buying from the UAE, Algeria, Lebanon, Iraq and Morocco.
• Kernel trade patterns: May kernel shipments rose 23% year on year to 39,267 pounds. Exports climbed 41%, while domestic kernel shipments increased only 2%, underlining the export-driven nature of the current rally.
• Full-season kernel demand: Cumulative kernel movement is up 11%, supported by an 18% rise in exports, while domestic use slipped 1%. This mix implies that international buyers, not US consumers, are absorbing the bulk of the additional supply.

Fundamentals by Region

Europe

Europe remains the primary destination for US walnut kernels. Shipments increased 24% to 168.9 million pounds from 136.6 million pounds. Germany led growth with a 32% rise, while Spain, the Netherlands, the UK and Italy also expanded purchases.

Despite this, performance is uneven: kernel shipments to Italy and Spain have softened in some recent periods (down 15% and 13%, respectively), suggesting pockets of demand resistance to higher prices or increased competition from other origins. Overall, however, Europe continues to underpin the kernel export program.

Middle East, Africa and Turkey

Turkey and the wider MENA region are the standout growth markets. Shipments to the Middle East and Africa are up nearly fourfold, with volumes rising from about 37 million to 183 million pounds. This reflects both structural consumption growth and active re-export and processing hubs in countries like the UAE.

Such exceptional growth is unlikely to be fully repeatable next season, but it demonstrates the region's growing strategic role in balancing US in-shell and kernel supplies.

Asia and North America

Kernel shipments to India declined around 10%, highlighting price sensitivity and possibly stronger local or alternative-origin supply. In contrast, Vietnam recorded an 88% increase, and North American kernel shipments rose 44%, helping diversify demand away from a few traditional importers.

Chinese walnut kernel prices have strengthened, supporting global price sentiment and limiting arbitrage opportunities into lower-priced origins. With the global 2025/26 walnut crop estimated to increase moderately but with strong early-season shipments from both the US and China, the market appears well supplied but far from burdensome.

Weather & Production Outlook

California, the dominant producer of US walnuts, is heading through the peak summer period with generally warm, dry conditions and elevated fire risk, typical for August. Seasonal outlooks point to above-normal temperatures and mixed precipitation signals, with El Niño development likely to bring a wetter-than-normal pattern later in the year.

For the current walnut crop, the main weather-related risks now focus on heat stress, water availability and potential smoke or wildfire impacts rather than bloom or nut set, which are largely determined earlier in the season. At this stage, no major weather shock is evident that would significantly alter the 2026 harvest potential, though localized issues remain possible.

Short-Term Forecast & Trading Outlook

Market Direction (next 2–4 weeks)

• In-shell: Export-driven tightness in US in-shell supplies, especially toward Turkey and MENA, should keep in-shell values supported in EUR terms, with a mild upside bias if new sales remain strong.
• Kernels: With Chinese kernel prices firm and FOB offers from China, the US and India stable, near-term kernel prices are expected to trade sideways to slightly higher in EUR, particularly for higher-quality light halves and quarters.
• Regional spreads: Premiums for organic and higher-grade product (US and Indian light halves) over Chinese industrial pieces are likely to persist, reflecting tighter supply and stronger branded demand.

Trading Recommendations

• Buyers (roasters, packers, importers): Consider covering a moderate share of Q4 2026 and early 2027 needs now, especially for light halves and quarters, while prices in EUR remain stable. Focus on origins with strong shipment momentum (US, China) but monitor freight and logistics costs into Turkey/MENA hubs.
• Sellers (growers, handlers, exporters): Maintain a disciplined sales pace. With export demand strong and Chinese prices supportive, there is no immediate need for aggressive discounting. However, avoid excessive stock carry into the new crop; lock in margins on forward sales where basis and FX are favorable.
• Traders: Watch spreads between in-shell and kernels. Given tight in-shell availability and robust kernel shipments, selective shelling and product mix optimization may yield better returns than pure flat-price exposure.

3-Day Regional Price Outlook (directional, in EUR)

• China, FOB Dalian (kernels, various grades): Stable to slightly firmer in EUR, supported by domestic strength and steady export interest.
• US, FOB Europe (organic light halves): Stable; limited nearby availability and strong shipment data argue against price weakness.
• India, FOB New Delhi (organic light halves): Stable with a modest premium to US product reflecting niche demand and smaller export scale.