Nuts

Walnuts: Moldova and Ukraine in for competition

September 19, 2022 11:43 AM, Der AUDITOR
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SACRAMENTO/CHIȘINĂU. California Walnuts reckons that US exports climbed by nearly 4% in 2021/2022, whereas domestic shipments declined by 10%. Producers in Moldova are, by contrast, eager to fill any gaps and step up exports, especially to Europe this year and exports from Ukraine are expected to pick up in 2022/2023.

Rise in shipments to Europe

Europe is an important export destination for US walnuts, especially in 2021/2022 as California Walnuts recently issued preliminary shipment report shows. Inshell shipments to Europe rose by more than 20% to 148 million pounds as compared with 2020/2021 and accounted for 49% of total exports last season. US inshell exports, in fact, climbed to nearly 300 million pounds in 2021/2022, whereas domestic shipments declined to 195 million pounds. Germany most notably stepped up buying by more than 30% and retained its position as leading export destination for US walnuts, followed by Japan and South Korea, where shipments are down.

Prospects for 2022/2023 are not quite as encouraging. Issue is that frost in February coupled with prevailing hot and dry weather conditions in recent months prompted the United States Department of Agriculture National Agricultural Statistics Service (NASS) to revise production estimates downwards to 720,000 tons. Although this is only 1% down on last year’s production of 725,000 tons, it should be noted that it is mainly the 3% increase in acreage to 400,000 acres that prevented sharper declines. Average yields range 3.3% lower at 1.80 tons/acre this year.

US walnut shipments, shelled in 1,000 pounds

Destination

2020/21

2021/22

Diff.

USA

215,936

194,667

-9.85

Germany

57,918

76,051

31.31%

Japan

42,624

42,337

-0.67%

Korea

35,854

30,948

-13.68%

Spain

24,577

26,294

6.99%

Netherlands

15,361

18,405

19.81%

Israel

13,751

15,726

14.37%

Mexico

17,067

15,585

-8.68

UK

13,096

10,871

-16.99%

Taiwan

9,479

8,189

-13.60%

UAE

8,366

6,937

-17.08%

Grand Total

504,822

494,574

-2.03%

Domestic Total

215,936

194,667

-9.85%

Export Total

288,885

299,907

3.82%

California Walnut Board, Preliminary Monthly Shipment Report (13/09/22)
MY 01/09-31/08

Moldova to get a head start

These estimates have been closely followed in Moldova, where producers are keen to start exporting the new crop before European and American varieties arrive. Optimism prevails as the harvest campaign started ten days earlier than usual as EastFruit reports with growers presently harvesting local varieties such as Peschansky walnuts. Although quality is reported to be above average so far, concerns are being voiced over large volumes of walnuts with a drying pericarp. Trouble is that these nuts need to be processed quickly to avoid kernels from darkening and obtaining a strange taste. Producers are, nevertheless, confident that the early start to the harvest campaign will give them a head start and negotiations with buyers in Italy, Slovakia and Germany and France are underway.

Ukraine to step up exports

Although many uncertainties naturally persist in war-torn Ukraine, these are not the only issues producers are confronted with. The USDA’s local Foreign Agricultural Service (FAS) has recently issued a new production estimate for 2021/2022 that undercuts the USDA’s official figure of 132,745 mt by 13%. Issue is that growing conditions were below average between May and August 2021 and soil moisture was lacking. As similar growing conditions prevailed this year and growing areas are located in regions occupied by Russia in February, production is expected to take another 11% dip this year.

Exports should, however, rebound by 57% in 2022/2023 due to the grain corridor agreed between Russia, Ukraine and Turkey. Ukraine mainly exports shelled walnuts, of which it shipped more than 21,500 mt overseas between September 2021 and May 2022. This, in other words, is an 8% decline on the same period in 2020/2021. While shipment to the EU remained on a similar level of 15,300 mt, exports to Turkey slumped by 23% to 1,400 mt, to Azerbaijan by 23% to 1,200 mt and to Belarus by 75% to 226 mt. In-shelled exports also declined sharply by 34% to 5,700 mt in the same period. These sharp declines resulted in higher carry-in supplies for the new season.

Although beginning stocks have more than tripled, it is to be questioned in how far exporters will be able to sell supplies from last year’s crop given that these stocks may not meet the quality standards in many importing countries. The stocks may very well, however, impact prices as exporters will have to go down in prices to get rid of the large stocks. While the sharp declines in exports witnessed between September 2021 and May 2022 vividly demonstrate the impact the war has had in cutting ties with countries in the east, another problem is that Ukraine mainly ships shelled walnuts in halves. The global market, however, prefers smaller sizes, which causes suppliers in Ukraine to lose out against their competitors in the United States, China and Chile.

Walnuts, inshell basis, production, supply and demand, Ukraine

Ukraine

2021/22

2022/23

Diff.

Area harvested (ha)

18,100

15,657

-13.5%

Bearing trees (1,000 trees)

3,390

2,932

-13.6%

Beginning stocks (mt)

11,218

36,282

232.4%

Production (mt)

115,400

95,505

-11.3%

Imports (mt)

50

25

-50%

Total supply (mt)

126,668

131,812

4.1%

Exports (mt)

60,386

95,000

57.3%

Domestic consumption (mt)

30,000

30,000

0%

Ending stocks (mt)

36,383

6,812

-81.3%

FAS-Kyiv Forecast, MY starting in September, issued in September 2022

Prices tumble in Europe

With the new crops arriving in the northern hemisphere, the spot market prices for Chilean walnuts have declined sharply in Europe in September. The Prices for US walnuts have also declined, albeit to a much more nominal degree. Suppliers are offering Chandler, LHP, 20% at EUR 4.90/kg (USD 4.61/kg) FCA Spain.

Walnuts

Type, origin

EUR/kg

USD/kg

Inshell, Chandler, 30-32 mm, Chile

2.27

2.25

Inshell, Chandler, 30-34 mm, Chile

2.37

2.35

Chandler, ELHP, 80%, Chile

6.15

6.10

Chandler, LHP 20%, USA

4.90

4.61

Chandler, LHP, 80%, USA

6.33

5.95

FCA Spain

 

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