Northern Hemisphere crop: The Northern hemisphere crops are completely harvested. Crops are slightly lower than last year. A slight price correction happened in August for inshells due to the lockdown in Vietnam.

Southern Hemisphere crop: Tanzania’s crop looks good with no adverse weather impact

Kernels: Kernel prices are stable with limited spot availability. There is a healthy demand in India as the COVID-19 situation normalizes. Healthy demand expected in Q4 in US & EU. Healthy demand from China and rest of Asia as buyers look to schedule their shipments early. With over 12,000 COVID cases daily, a strict lockdown was extended in Vietnam. Shipment delays and spot shortages at destination likely to continue through Q4.

Bullish Triggers:
• Reduction in processing capacity to less than 50% in Vietnam since mid-July, reducing kernel availability.
• Requests for early shipments by buyers will likely put pressure on spot coverage.
• Lower exports from Vietnam to US & EU in August and September reducing Q4 availability at destination.
• Higher transit times, port congestion in US and continued shipment delays from Vietnam.
• Healthy demand projections across US, EU & China led by low shelf prices and holiday season demand.

Bearish Triggers:
• COVID-19 wave 3 and any future demand impact.
• Reduction in processing capacity in Vietnam leading to lower demand for inshells.

The market continues to gain traction at current market levels and has shown strength as it is increasingly apparent the size of the crop will be closer to the 2.8-billion-pound objective estimate than the 3.2-billion-pound subjective estimate. Additionally, kernel sizes with regards to the Nonpareil variety are skewed towards the smaller end, with the heart of the sizing in the 27/30 to 30/32 range. Thus far anything larger the 23/25 is very scarce. Pricing between the sizes is much greater as we move off the 27/30 – the gaps continue to grow by as much as a $.35/lb. differential as an example between the 23/25 to the 20/22. This will most likely continue to be the pattern we see throughout the 2021/2022 crop year.

With a scarcity of the larger sizes, more and more customers will be forced to smaller sizes and even variety switching. This should also ultimately bring additional pressure to those sizes like the 27/30 in the Nonpareil and renewed interest in the larger varieties like the Independence and Monterey (although it is very much in question whether larger kernel sizes will even exist in these this year). These other varieties are now being harvested and on their way to huller/shellers, soon we will have a better idea of what the extent of the dry conditions have done to the 2021 crop.

With each passing day, more information will be available and additional observations will be formed. Expect the market to remain close to the vest as we continue to receive crop receipts through the fourth quarter with all eyes on the weather and snowpack as we move towards the February bloom.

California is expecting a slightly higher crop than the earlier estimate of 900 million lbs. Harvest is expected to finish by the first week of October. Crop quality seems good, though kernel sizes are much smaller than average. Most processors are expected to offer 21/27 sizing. Turkey has an off-year crop, and Iran’s crop was affected by frost damage. Pistachio demand is growing year on year. Prices are range bound between $3.95-$4.05 for inshell 21/25 X1. Kernel / shelling stock inventory remains extremely tight, but availability is expected to get better with the new crop. Kernel wholes X1 are being traded around $8.20-8.25/lb.

The 2021 crop objective estimate has come in at 670k tons. Considering carryover, total supply is estimated at 755k tons, -11% from last year. Early varieties harvest started the week of September 2nd. As compared to last year, expectations are of less defects, slightly darker color, and smaller sizes. Harvest is expected to complete by the end of October. Demand for walnuts remained robust during the 2020/21 crop year. Low prices and increased health awareness brought on by COVID-19 increased consumption. California shipped 760k tons during last season. Considering minimum carryover, only 680-690k tons can be shipped in the coming season. Both inshell and kernel prices have increased substantially due to a much shorter 2021 crop. Light grades are being traded around $3.40/lb. while Light Amber is around $2.80-3.00/lb.

Crop conditions remain very favorable. USDA indicates that conditions have declined slightly in Texas and North Carolina but have generally stayed the same or slightly improved in most other states.

USDA NASS released the September Crop Production report. 2021 planted and harvested peanut acres were actually lowered vs. the report last month. Harvested acres are now predicted to be down 5.1% vs. last year (report last month predicted a 1.8% decline). Production is now forecast to be 3.174 million farmer stock tons (3.317 million tons forecast in last month’s report). Yields are predicted to be 4,141 lbs. per acres now (4,183 lbs. in last month’s report). The updated planted / harvested acres reflected in the report are more in line with the Certified Acres Report that was issued a few weeks ago. It’s likely we will see continued adjustments over the next few months (acres, yields, etc.).

Harvest is underway in some areas, though still early. According to the Federal State Inspection Service, 7,284 farmer stock tons have been received and graded as of 9/8/21. Harvest will rapidly pick up pace, with the bulk of harvesting occurring in late September through October.

Temperatures are generally seasonable with no extremes at the moment. Recent tropical storm & hurricane activity has brought additional rainfall to some areas of the southeast, but the rainfall has been beneficial and hasn’t caused any significant problems. Favorable weather will be needed over the next 6 weeks as harvest ramps up, and additional tropical activity should continue to be closely monitored.

U.S. demand is seemingly still strong, up 3.4% for the 12 months ending July 31st. Export demand for the 2020 crop reporting period was down 12% vs. the prior year, but still the 3rd highest total ever recorded. Still no new, meaningful interest from China at this time as current stocks are plentiful, and their domestic production looks generally favorable at this time.

Factors to Watch:
• Weather during the final, critical stage of crop development & harvest (September – October)
• Global crop production (US / China / India / etc.)
• Chinese demand, or lack thereof
• Competitive crop prices for calendar ’22. Cotton, corn, and soybean prices all rallied and remain very firm for ’22.
• Impacts from COVID-19 (prevalence of cases and how government mandates might impact the economy).

Most new crops from many origins are now harvested, and trading activity is at its peak. The Turkish crop is expected to be around 770-800K MT inshells – a 3rd successive year of above average crop. We have a notable carry over, but lower than initially expected, since export numbers did pick up in the 2nd / 3rd quarter of 2021. Some of these crop gains might be reduced due to the lower Italian and US crops. We have seen Italian buyers being much more aggressive this year in the Turkish market.

Post the TMO support price of – 26,50 TL/kg was declared, the principal hazelnut buyer started sourcing a price of 25 TL/kg the following week. This has formed a firm support to the market in TL terms. It is expected that 40-50K MT inshells have been allocated to various suppliers by the principal buyer at these levels. The principal buyer has recently announced its kernel sourcing benchmark and is sourcing aggressively in the Turkish market.

We are observing long queues to deliver to the TMO – the online appointments for deliveries are full through mid-October – indicating that farmers are ready to sell to the TMO at the declared price rather than selling to the open market at lower levels. The hindrance though is tighter specs by TMO, and that the payment delay is 3-4 weeks post-tendering the stocks.

Demand continues to pick up as lockdowns ease globally. We have seen most large European businesses and the global confectionery industry covering for their Q1/Q2 2022 requirements in the last 2-3 weeks. The TL remains volatile and will continue to play a major role in determining prices.

The global macadamia nut forecast now stands at 239K MT, which is 5% more than last year. Australia’s macadamia forecast was revised down by 4.5% to 48K MT due to severe weather conditions affecting the New South Wales region. South Africa’s crop estimates were revised down by 6% to 54KMT and stand at 85% crop receipt. China is expected to have an equivalent to last year while Kenya continues to struggle with the turnout this year as well.

Overall demands seem to be picking up as more and more economies recover from the pandemic. Imports into China have been picking up on account of Chinese New Year demand. Australia has reported their biggest exports into China in the last 4 years and the demand is up by 35% compared to last year. Similar trends are being observed in Korea. On this mandate of driving consumption and demand for a nut which is poised to double the crop numbers by 2025, World Macadamia Organization (WMO) was formed and launched in Singapore last week.

Inshell prices are stable over the last three weeks and we expect a bullish view in the short to medium term as the demand picks up after COVID-19 and reports of short crop from initial estimates. We have already started to see the price for halves moving up and differentials reducing between wholes and halves by 30 cents/lb.