Walnut Market Tightens as U.S. In‑Shell Exports Surge and China Raises Kernel Offers

U.S. walnut fundamentals have tightened markedly as in‑shell shipments more than double year-on-year, driven by aggressive buying from the Middle East, Africa and selected Asian markets. Export demand is absorbing a large share of available supply, while China is lifting kernel export quotations, underpinning a firmer global price floor in the short term. The current marketing season is characterized by a sharp geographical rebalancing of demand. California handlers are channeling much larger volumes into fast-growing emerging markets, particularly Turkey and several MENA destinations, while Europe and India are retreating. At the same time, shelled walnut trade is expanding at a solid pace, and Chinese kernel prices are rising, adding upward pressure to international values. With spot kernel offers in Europe and Asia broadly stable but no longer cheap, buyers with open coverage face a market that is shifting from oversupplied to increasingly demand-driven.

Prices

Chinese and U.S. walnut prices are moving off the lows as export demand and higher replacement costs support a firmer tone. Recent Chinese FOB kernel offers remain stable week-on-week in euro terms, but underlying dollar-based indications from China have increased, reflecting the reported rise of roughly $70–$160 per tonne in kernel export quotations during the latest reporting week.

Spot kernel indications converted to EUR suggest a clear price hierarchy between origins and qualities, with organic U.S. and Indian product commanding the highest premiums:

Flat week-on-week quotations in the price sheet hide the underlying tightening: with U.S. in‑shell exports surging and Chinese kernel offers rising in dollar terms, forward replacement costs are higher than spot, suggesting limited downside for near-term EUR prices.

Supply & Demand

U.S. in‑shell walnut shipments in the current marketing season have more than doubled versus last year, approaching 300 million pounds on a season-to-date basis. Export volumes are the main driver, up 114%, while domestic shipments have risen 47%, underscoring broad-based demand strength rather than a purely export-led spike.

May in‑shell shipments reached 12.86 million pounds, more than twice the 5.56 million pounds recorded in May 2025. Exports accounted for roughly 12.50 million pounds, compared with only 5.23 million pounds a year earlier, while domestic in‑shell shipments advanced 11% to 364,000 pounds. This acceleration confirms that pipeline stocks are being actively drawn down.

Regional demand is highly uneven. Shipments to the Middle East and Africa surged 395% to 183 million pounds from 37 million pounds, with strong gains in Turkey, the United Arab Emirates, Algeria, Lebanon, Iraq and Morocco. Turkey alone emerged as one of the fastest-growing destinations, with purchases rising nearly fivefold, turning the country into a key outlet for California in‑shell supply.

By contrast, European buying has softened. Overall in‑shell shipments to Europe slipped 5% to 53.1 million pounds from 55.8 million pounds, with Spain down 13% and Italy up 15%. In Asia, India’s imports declined about 10%, but this was more than offset by robust demand elsewhere in the region, particularly an 88% increase in shipments to Vietnam, lifting overall Asia-Pacific in‑shell volumes by 5%.

Shelled walnuts are also seeing healthier flows. Kernel shipments reached 39.27 million pounds in May, up 23% from 31.82 million pounds a year earlier. Export kernel shipments increased 41% while domestic kernel demand grew modestly, indicating that price-sensitive overseas buyers are still actively switching between kernels and in‑shell depending on relative value.

Fundamentals & External Drivers

The surge in U.S. exports, especially to the Middle East and Africa, is rapidly rebalancing what had been a burdensome supply situation in previous seasons. Strong in‑shell off-take from price-sensitive emerging markets suggests that current price levels remain attractive versus competing tree nuts, helping clear inventories and firm the market.

At the same time, China’s move to raise kernel export quotations by around $70–$160 per tonne within a single reporting week signals tightening availability and stronger domestic or regional demand. For international buyers, this narrows the price gap between Chinese and Californian kernels, reducing the arbitrage that previously favored aggressive spot purchasing from China.

European demand remains the main soft spot in the global balance, but the scale of the Middle East, Africa and selected Asian buying more than compensates for slower offtake in Spain and parts of the EU. India’s roughly 10% drop in imports appears to reflect short-term demand or inventory adjustments rather than a structural decline, especially given simultaneous strength in neighboring Asian markets such as Vietnam.

Weather conditions in California’s Central Valley and major Chinese walnut-growing provinces remain seasonally important but, based on available information over recent days, there are no confirmed acute weather shocks significantly altering yield expectations for the current analysis window. As a result, trade flows and price competitiveness between origins are the dominant drivers of near-term fundamentals.

Short-Term Outlook & Trading Strategy

Given the sharp increase in U.S. shipments and higher Chinese kernel offers, the walnut market is transitioning from a buyer’s to a more balanced, demand-led environment. Nearby price weakness now appears limited, while upside risk is growing if MENA and Asian demand remain strong into the new crop period.

• Buyers (roasters, packers, retailers): Consider advancing coverage for Q4 2026–Q1 2027, particularly for in‑shell and standard-quality kernels, while spot prices in EUR remain stable. Focus on securing U.S. and Chinese origins before higher replacement costs fully feed into offer levels.
• Importers in MENA and Asia: Maintain at least normal-to-slightly-above-normal inventories. With exports from California already up 114% and Chinese kernel quotations rising, delaying purchases could mean facing tighter offers, especially for premium sizes and lighter colors.
• European buyers: Weak regional demand provides some bargaining power, but the global balance is tightening. Use any short-term dips to lock in strategic cover rather than relying on continued softness into the new season.
• Producers and handlers: The current demand strength argues for disciplined selling. Gradual marketing of remaining old-crop stocks into the rally, rather than aggressive discounting, appears justified as long as export momentum persists.

3‑Day Directional Price Indication (EUR)

• Chinese kernels FOB Dalian (all grades): Sideways to slightly firmer over the next 3 trading days, with upside bias driven by higher replacement costs and stronger export demand.
• U.S. organic light halves FOB Europe: Steady with a firm undertone; limited liquidity and strong niche demand support current premiums around 4.50 EUR/kg.
• Indian organic light halves FOB New Delhi: Stable at elevated levels near 5.30 EUR/kg; no immediate signs of price relief given strong regional demand and higher global benchmarks.