Walnuts: US In‑Shell Shipments Surge as China Lifts Kernel Price Floor

Exceptionally strong export demand for US in‑shell walnuts, especially from the Middle East, Africa and selected Asian markets, is driving a sharp tightening in available supply and underpinning firmer price expectations into the new crop. At the same time, China is lifting kernel export quotations, creating a higher global floor for kernels and narrowing arbitrage between origins. In this environment, California handlers are rapidly clearing in‑shell inventories, with season‑to‑date volumes more than doubling last year’s levels and export growth far outpacing domestic use. Demand is highly regionally concentrated: Turkey and a cluster of Middle Eastern and North African buyers are absorbing much of the flow, while Europe and India show softer interest. Kernel shipments are also rising, and with Chinese prices moving higher, downside price risk on kernels looks increasingly limited, even as the market assesses the size and quality of the upcoming US crop.

Prices

Chinese walnut kernel export prices have increased by roughly USD 70–160 per tonne in the latest reporting week, signalling a clear upward adjustment in the global kernel price floor. Concurrently, spot offers converted to EUR show stable but relatively firm levels for main grades from China, and higher premiums for US and Indian organic product.

The absence of recent price cuts in these key physical offers, combined with China’s week‑on‑week kernel price hike, suggests that buyers should not expect meaningful discounts on near‑term kernel coverage. Instead, any additional upside in US grower returns will likely come via in‑shell premiums driven by strong export pull rather than kernels alone.

Supply & Demand

US in‑shell walnut shipments have accelerated markedly in the current marketing season. In May, in‑shell shipments reached 12.86 million pounds, more than double the 5.56 million pounds shipped in May 2025. Exports account for nearly all of this jump, climbing to about 12.50 million pounds from 5.23 million pounds, while domestic shipments advanced 11% to 364,000 pounds.

Season‑to‑date in‑shell shipments are now close to 300 million pounds, more than twice the previous year’s level. Export volumes have risen 114%, underscoring how aggressively overseas demand is drawing down US stocks, while domestic in‑shell use is up a robust 47%. This rapid off‑take reduces carryover burdens and strengthens the fundamental base for prices into the 2026/27 season.

Regionally, demand is highly skewed. Shipments to the Middle East and Africa have surged 395% to 183 million pounds, with Turkey emerging as one of the fastest‑growing destinations and purchases there rising nearly fivefold. Strong growth is also seen in the United Arab Emirates, Algeria, Lebanon, Iraq and Morocco, reflecting both genuine consumption and potential re‑export activity through regional trading hubs.

By contrast, European demand is comparatively softer. Total in‑shell shipments to Europe declined 5% to 53.1 million pounds from 55.8 million pounds. Within Europe, Spain’s purchases fell 13%, while Italy increased imports by 15%, partly offsetting Iberian weakness. In Asia, India’s imports declined by around 10%, but overall shipments to the Asia‑Pacific region still grew 5%, buoyed by an 88% increase in demand from Vietnam, which may also be acting as a redistribution point into wider Southeast Asia.

Fundamentals & China’s Role

Shelled walnut shipments are also strengthening, confirming that demand is not limited to in‑shell formats. Kernel shipments in May reached 39.27 million pounds, up 23% from 31.82 million pounds a year earlier. Export kernel sales expanded by 41% over the same period, while domestic kernel shipments saw more modest growth, indicating that the main incremental pull is offshore.

China, both a large producer and a key price setter for kernels, has reported significant price increases, with kernel export quotations rising by roughly USD 70–160 per tonne in the latest week. This move tightens the discount between Chinese and Californian kernels and raises replacement costs for global buyers, particularly in Europe and the Middle East, who often arbitrage between origins. With Chinese offers moving up while spot Chinese FOB kernel prices in EUR terms remain steady in recent transactional data, the balance of risk now tilts toward firmer global kernel values as new‑crop negotiations advance.

On the supply side, recent industry analysis still points to large US walnut crops, but younger, higher‑yielding orchards are partly offset by some acreage removals. In this context, the dominant driver for short‑term pricing is the pace of shipments rather than absolute production size. The current season’s exceptionally strong shipment profile – especially to the Middle East and Africa – is therefore a bullish signal, as it accelerates inventory drawdown ahead of the next harvest and reduces the risk of burdensome carry‑in stocks.

Weather & Regional Outlook

For the coming weeks, forecasts for California’s Central Valley, the core US walnut‑growing region, point to seasonally hot and generally dry summer conditions, with temperatures trending above the long‑term average and limited rainfall. This is broadly consistent with recent seasonal outlooks that highlight warmer‑than‑normal weather and elevated fire potential across much of California through August.

At this stage of the growing season, such conditions are not unusual and do not yet point to widespread yield losses. However, sustained heat and localized water stress could affect kernel fill and quality in late summer, particularly in orchards facing irrigation constraints. Any clear signs of quality downgrades or regional production issues would likely reinforce the current firm tone in both in‑shell and kernel markets.

Trading Outlook

• Buyers in the Middle East & Africa: Given the near‑400% surge in US in‑shell shipments to the region and Turkey’s nearly fivefold import growth, securing forward coverage for Q4 2026–Q1 2027 appears prudent. Relying on spot availability later in the season carries higher price and logistics risk.
• European buyers: With in‑shell imports slightly down and competition from MENA and Asia intensifying, consider locking in at least partial kernel and in‑shell positions before Chinese and Californian offers move further up. The recent Chinese USD 70–160/t kernel price increase suggests limited downside from current EUR levels.
• Asian buyers (ex‑India): Vietnam’s 88% growth in imports underlines strong regional pull. Buyers in Southeast Asia should monitor Vietnam’s re‑export activity and consider diversifying supply between US and China to mitigate origin‑specific price spikes.
• US handlers and growers: The combination of doubled season‑to‑date in‑shell shipments and rising kernel benchmarks from China justifies a firm pricing stance on remaining old‑crop stocks. However, maintaining shipment momentum into the new marketing year will be critical to sustain or improve grower returns.

3‑Day Directional Price Indication (EUR)

• US in‑shell (export, CIF MENA/Asia, implied in EUR): Slightly firmer bias as strong shipment data meets tight nearby supply; modest premium gains over the next 3 days are likely rather than sharp jumps.
• Chinese kernels FOB Dalian (all main grades): Stable to slightly higher; the recent USD 70–160/t increase in Chinese quotations suggests any fresh offers are more likely to nudge up than down.
• US & Indian organic kernels FOB Europe/Asia: Firm; no sign of discounting, with premiums over Chinese conventional material expected to hold or widen marginally in the very short term.