April shipments were a significant improvement over the last six months, with shipments being up versus last year for the first time since September, and up double digits at 10.1%. This is certainly another step in the right direction as the industry continues to chip away at the carry out number, with our current carry out projection being around 125k tons. It is worth noting that 97.5% of the 2021 crop and 85.8% of total supply is already sold. However, the challenge for the industry will be to ship as much as possible over the last four months of this crop year to end up with a manageable carry out. We are forecasting shipments over the last four months (May-Aug) to be 15% higher than last year, which we believe is very attainable.
Chile is still enjoying a price premium over California, and other origins and seems to be moving through their crop efficiently, as demand for their higher quality product is strong. It was announced during the “Walnuts Roundtable” at the INC Conference in Dubai, that the global supply for walnuts is forecasted to increase substantially in 2022, by as much 440k MTs or 18%. This is driven mostly by a large crop in China.
With global supply increasing at all the major origins, the modus operandi remains the same for the California walnut industry: sell and ship as many walnuts as possible.
With several large origins for walnuts, it will take some time for supply and demand to balance out. However, we are starting to see the California agriculture landscape littered with walnut trees being removed in their prime.
While the growth in supply should keep upside pricing potential limited in the near term, we also expected limited downside as prices are already at historical lows. With this stability in price expected for the foreseeable future, it is a great time to invest in new product development, and innovation for walnut-based products.
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