The first shipment month of the 2022 crop season is officially under way. The California walnut industry is off to a decent start, with both shipments and commitments slightly higher than last year. Strong commitments are necessary, as the industry is focused on an improved start compared to last year. While commitments are currently 5.4% higher than this time last year, increased sales and stronger shipment months are needed to reduce the 2022 crop carry-out to a manageable level. Demand, however, has been hard to come by early in this crop year as many global factors are at play, including a record crop in China, weakening demand across nuts, and a strong dollar.
As price levels are already below the cost to farm and lowering the price any further will not likely improve demand, we expect downside to remain limited. The industry needs to put our full efforts behind marketing initiatives to help sell more walnuts.
Early industry consensus is that the 2022 crop will fall short of the initial 720,000 estimate. While this is painful for growers experiencing less yields, any reduction in walnut supply is a welcomed reprieve for the industry. Speculation is that the color and quality of this year’s crop will be down due to the record heat experienced at the end of the growing season. It is worth noting that quality across our small handle is better than last year so far in terms of both yield percentage and color, however, this is across a small sample size.