October 2020 WALNUT MONTHLY MANAGEMENT REPORT AND DISCUSSION
The California Walnut Board released the Oct. 2020 Position Report. Our table of these figures are shown below:
This is the 2nd month of the 2020-2021 walnut season so it is a bit more telling. Receipts are up to 686,026 inshell ton compared with the prior year at this time of 583,199 inshell ton. Extrapolating of last year’s receipts at this time of 583,199 ton was 89.6% of the final receipt of 650,730 ton. Using this same percentage, the current 686,026 ton of receipts would indicate a crop of approximately 765,915 ton versus the estimate of 780,000 ton. Yield will play a significant part in the quantity of edible nuts as many packers report Chandler yields over 50% in some cases and in the high 40’s in most cases.
Now that more crop is in, quality overall is reported to be only fair with more packers advising that Chandler has much more “color” than they would otherwise like. Combo will be more than prevalent this year and good quality Chandler will be a challenge.
Monthly inshell (total) equivalent shipments +8.2% vs. PY
– Export inshell equivalent shipments +8.3% vs. PY
– Domestic inshell equivalent shipments +8.0% vs. PY
YTD September/October 2020, Italy, Spain, India and Turkey were the largest players. Overall inshell was up 7.19% YTD at 103,569,310 inshell pounds. YTD Kernel sales up 12.17% over PY with Germany the largest player at 7,670,686 shelled pounds yet they were -3.45% PY.
2- month shipment assessment – Shipments during the 2019-2020 first two months last year were 122,417 inshell ton compared with 132,814 inshell ton so far. This means the remaining 10 months last year averaged 51,000 ton to leave a carryout of 64,000 ton. Now, for the remaining 10 months, you have to average 64,718 ton each month to leave the same carryout. This is a quite substantial monthly average increase.
Surges can be seen in many countries including the USA, India, Brazil, France, UK, Italy, Spain and Germany to name a few. Many countries are reinstituting restrictions. This is a large unknown that could very much hurt the walnut industry if restrictions increase and continue.
Chilenut released October Walnut Position report with shipment of 12,010 tons compared to last year of 5,280 tons increase of 127%. For the YTD shipments; UAE down 64%, Turkey down 32%, China up 8% and India up 134% compared to last year. YTD shipments are 113,566 tons compared to 123,972 tons last year a decrease of 8.4%.
We are being advised that Chile has less than 10,000 ton left which is of mediocre to poor quality. They will largely be a non-factor until April of 2021.
New Crop Inshell Prices and Kernel Prices
J/L Chandler’s $.83 – $.86/lb, Jumbo Chandler $.88 – .90/lb. New crop Chandler LHP 20’s currently in the $2.15 to $2.25/lb range. New Crop Domestic LHP is $1.90 – $2.00/lb range and Combo Halves and Pieces in the $1.80/lb to $1.90/lb range. Chandler halves are in the $2.55 – $2.65/lb range.
Packers appear to be very busy trying to get in the crop from growers, fulfill existing commitments and deal with headaches such as container and truck shortages. Many plants are wary of the Covid-19 issue and are adverse to getting an outbreak in their plants which is next to a disaster.
Like our last report, many packers we deal with are pretty comfortably sold at 50-70% as they were aggressive early on (generally at higher levels). This is a double edge sword as packers know that they have to get out higher priced shipments on time or risk cancellations. We have heard of many “bookings being rolled” through no fault of the packer due to a shortage of containers. Other packers have challenges ahead of them as they are less than well sold. Recently, we have heard from many of these packers and these are generally packers that don’t have a large following, stellar QC paperwork or a strong brand as they sometimes focus on inshell business only. These packers will tend to be an anchor to the decently sold packers who still have product to move. This year will be a challenge as buyers, ever wary of a falling market will be adverse to contracting and with Covid, they will not have good numbers in which to forecast their needs. Hence, spot business is prevalent and contracting scant. Some to the large packers will have to carefully manage this situation as they normally rely on contracting to forecast cash flow and production.
Hopefully the USDA Trade Mitigation programs will continue to move walnuts as prices are very attractive to these government buys. The normal industry issues such as space, cash flow for grower payments and cold storage all will be exacerbated this season. We hear growers are already contacting their bankers to extend lines of credit ahead of dismal walnut returns which are under grower cost.