Weak demand from Turkey and booming exports from China could pressure walnut prices
Weak Demand from Turkey
Turkey is typically the world’s fourth-largest producer of walnuts and the world’s largest importer. According to TurkStat, Turkey’s walnut crop reached a record 325,000 mt in 2021. Turkey puts a lot of focus on self-sufficiency in food production. Human consumption for the 2020 season was 294,698 mt, and Turkey’s walnut self-sufficiency was reported at 72.7%. The rest was made up through imports. Turkey imported an average of 61,586 mt of in-shell walnuts for the 5 years ending 2020. Imports for the first 10 months of 2021 were robust already reaching 67,772 mt by the end of October.
Source: TurkStat, ITC Trade Map
There is normally an increase in imports at the end of the year, specifically from November. While imports for the first ten months of 2021 were strong, demand was reportedly subdued for the last two months. Official import figures for November and December have not been released but the normal increase at the end of the year might not be as pronounced as in previous seasons.
There are several factors that softened Turkey's demand for walnuts. The most obvious being the large local crop. Another factor is the weakening Turkish Lira. The TRY has lost 45% of its value agains the USD YoY to mid January. This makes imported walnuts more expensive.
Source: ITC Trade Map, TurkStat
Another changing dynamic is that more and more of Turkey’s imports are coming from China. For the first 10 months of 2021, China supplied 15% of Turkey’s in-shell walnut imports, compared to only 2% five years ago. In fact, China has become a top global exporter, after exporting virtually no walnuts 5 years ago.
Source: ITC Trade Map
China’s thriving exports
China steamrolled into second place on the global in-shell walnut export list in 2020. China exported 72,460 mt of in-shell walnuts in 2020. Five years before, they exported only 61 mt. China’s shelled walnut exports increased to 23,148 mt, in 2020 (fifth place globally) from only 5,440 mt 5 years before.
Frost and hail damage was reported in China’s largest walnut province, Xinjiang, in spring. Initially, this sparked fears that the world’s largest producer of walnuts will have less available for exports. However, damage in Xinjiang was offset by a better crop in some of the other provinces, including Yunnan. According to a recent estimate by EastFruit, China exported 110,000 to 115,000 mt of in-shell walnuts and 45,000 to 47,000 mt of kernels. This would put them second overall if in-shell and shelled exports are combined. Official export figures have only been released until the end of August when it stood at 55,021 mt for in-shell and 27,897 mt shelled.
Source: ITC Trade Map, EastFruit
Prices are under pressure
Most domestic walnut prices increased slightly on weather concerns over China in September, Even as the harvest came in in the Northern Hemisphere, prices moved slightly higher with demand seemingly strong and the extent of the damage not known. Traders were also willing to pay higher prices if they were sure to secure delivery given that global logistics are still in disarray. However, it now seems that any damage to the crop did not stop Chinese walnut exports from marching higher. With demand from Turkey being slower than usual over the last few months, global prices have come under pressure.
Prices in some key walnut supplying countries are already on the decrease, while in others prices are moving sideways. Prices dropped 8% in Moldova last week, the world's 7th largest exporter of shelled walnuts and are trading at USD 6.11/kg according to EastFruit. On the other hand, the tension between Ukraine and Russia could underpin prices. Ukraine is typically the world’s 4th largest exporter of shelled walnuts, exporting on average more than 30,000 mt annually.
Source: Tridge
Sources