China is the world’s leading producer of walnut and USDA anticipates production to rise by 27% YoY to 1.4 million mt in MY 2022/23. This increase is due to the region of Xinjiang, China's largest producer of walnuts, recovering from a poor harvest caused by spring frost, which lowered the region's production of walnuts by 20% YoY in MY 2021/22. Large-scale walnut orchards are planted on flatlands in Xinjiang, making crop management and harvest less costly. Tridge’s wholesale price data for walnut in Xinjiang has dropped by 3% MoM to USD 3.89/kg in the W4 of October 2022.
The rise in production may decrease China's reliance on walnut imports in the global market. Chile has surpassed the US as China's top supplier of walnuts because Chilean walnuts can enter China with zero tariff thanks to the Chile-China free trade agreement. Meanwhile, US walnut shipments to China are subject to tariff rates of 35% for shelled walnuts and 40% for in-shell walnuts.
Lower prices with an ample supply in the domestic market will have a positive impact on China’s dynamic walnut export market in MY 2022/23. Chinese walnut rarely enters the EU as Chilean and US walnut dominate the EU market. Chinese walnut rarely enters the EU as Chilean and US walnut dominate the EU market. Due to their light color and mild taste, varieties from the US and Chile including Chandler and Hartley are preferred by EU consumers. While certain varieties—like the Xinjiang thin-shelled ones—are large-sized and have a high kernel to in-shell nut ratio, generating a slightly bitter flavor. But it is compensated by exports of both in-shell and shelled Chinese walnut in the Middle East and Central Asia countries, particularly the UAE, Kazakhstan, Turkey, Kyrgyzstan, and Nepal.
As the amount of Chinese walnuts produced is expected to rise by 1.4 million mt in MY 2022/23, 1 million mt of walnuts are estimated to be sold domestically, and 400,000 mt will be exported. To help improve the quality and export of Chinese walnuts to the international market, the China Chamber of Commerce (CNFA) is currently developing an export quality standard for Chinese walnut kernels.
Turkiye is one of the main destinations for Chinese walnut exports. Tridge’s Distribution Manager in Turkiye reported that despite the Turkish walnut production being projected to increase, Turkiye still needs to import walnut to fill the gap in supply and meet domestic demand. Turkish importers are anticipating the arrival of imported walnuts on the market as Chinese production keeps rising. FOB Xinjiang's price for in-shell 30 mm walnut is around USD 2100-2125/mt. Owing to a bumper harvest and increased production, the Chinese walnut market price outlook will have a downward trend. In addition, the Chinese yuan depreciation against the US dollar will place an advantage to boost Chinese walnut exports in MY 2022/23.