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Walnut Situation and Outlook
|Walnut production in selected countries in 2001/02 is forecast at 708,262 metric tons, 4 percent above the previous years output, due primarily to a larger U.S. crop. Exports from China, the worlds largest producer, are forecast to remain stable, due to strong domestic demand. World walnut supplies are forecast to increase by 3 percent with a major increase in U.S. production of walnuts. This will likely lower U.S. grower prices, which fell 49 percent from 1996/97 to 1999/00. With expected lower world prices and significantly larger U.S. production of walnuts compared to the previous year, both world consumption and U.S. exports are forecast to increase. The United States is the worlds second largest walnut producer and the largest exporter.|
The 2001/02 U.S. walnut crop is forecast at 254,012 tons, 17 percent above last years crop, due to the alternate-bearing nature of the crop. U.S. exports in 2001/02 are expected to reach 108,611 tons, up 5 percent from the previous year, due to higher production and strong worldwide demand. In 2000/01, U.S. grower prices increased 37 percent from the previous year, reversing a three-year declining trend. The major increase in U.S. production of walnuts forecast for 2001/02 is expected to lower grower prices once again. However, this should spur world consumption and contribute to higher levels of U.S. exports in 2001/02. Shipments to Mexico, Australia, Egypt, and some Latin America countries were down in 2000/01 from 1999/00 but were up for Canada, Japan, Israel and the major European markets.
The 2001/02 walnut crop is on the way to being the second largest on record and is expected to contain probably the best quality of any walnut crop harvested in California. This large quality crop, combined with support from the Market Access Program (MAP), as well as publicity following the publication of the several health studies showing the health benefits associated with walnut consumption, is expected to translate into a good export year for walnuts. Exports to MAP-targeted countries of Canada, Germany, Italy, Israel, Japan, Korea and Spain are all slated to grow from 5 to 20 percent over the next 3 years. Spain, Japan, and Germany are still the top three markets, reflecting the strong consumer base in these countries. Also, Germany is the traditional trade center for nuts.
Chinas walnut production has increased for the last several years because of increased planting and bearing acreage, improved walnut varieties, and better tree management. Walnut production in 2000/01 surpassed the initial forecast by 10,000 tons. This was primarily due to the bearing cycle of walnut trees in Southern China and to very favorable weather conditions. However, walnut production in 2001/02 is forecast at 310,000 tons, the same as last year, due mainly to unfavorable weather conditions and the downturn in the bearing cycle of walnut trees. While there is no official data on walnut consumption, it is believed that most walnut consumption takes place in areas of production. The exception is that as walnut demand increases in some urban areas or during holidays such as the Chinese mid-Autumn festival, provincial trade increases to meet growing domestic consumption. It is estimated that 75 to 80 percent of domestically produced walnuts are sold raw each year to individual consumers. There is another estimated 10 to 20 percent of walnuts sold to processors. It is expected, however, that as Chinese companies refine processing technology, processed walnuts will gain some ground in domestic sales. Growing production and stable exports indicate that walnut consumption is growing. This increase is attributable mainly to rising incomes of many Chinese, who not only are demanding greater diversification in snack food preferences and baked goods, but also are becoming increasingly aware of the health benefits of nuts.
Chinas walnut imports have decreased. However, one trend surfacing is an increase in the volume of imported walnuts of Chinese origin. This occurs when a company within a special economic trading zone may have purchased walnuts from a production base within China. Then, a Chinese importing company may purchase walnuts from this company. The company then sends walnuts from the production base to the procurer and the paperwork gets routed through these special trading zones.
The volume of Chinese exports continues to grow. However, as a percentage of production, walnut exports have been stable. Traders have mixed sentiments regarding whether growing domestic consumption will have a negative impact on Chinas ability to export walnuts in the future. Traders report that Chinas market share of international walnut trade is shrinking. Chinese traders feel this is because of the increased production and exports from regional competitors, particularly India. Major export markets of shelled walnuts include the United Kingdom, Canada, Japan and France.
The 2001/02 Turkish walnut crop is forecast at 68,000 tons, a slight decrease from last year. This was due mainly to unusually hot and dry weather conditions. Walnuts grow naturally throughout most of Turkey and in the past, they were generally not cultivated but simply harvested from natural forests. However, during the last couple of decades, increasing demand and prices have made walnut cultivation more attractive, leading to increased investment in cultivation. The lack of a systematic crop survey and widely divergent estimates from government and non-official sources make it difficult to accurately estimate production. However, sources agree that walnut production is expected to gradually rise in the next 3-5 years, as new trees with improved varieties reach bearing age and acreage is increased. Per capita consumption is relatively stable in Turkey, with 50 percent of the crop production used for home consumption and the remainder marketed. Most of the marketed walnuts are consumed whole, with only a limited amount being processed. Walnut trade is very limited. Most imports are inexpensive, lower quality nuts from neighboring countries. Higher quality domestic nuts are usually exported.
Indias 2001/02 walnut production is forecast at 28,000 tons, a decrease of 10 percent from last years record crop. This is due to lower yields caused by early-season drought and the trees alternating bearing cycle. Exports are expected to decline to 14,000 tons based on lower domestic supplies and forecast to re-surge to 16,000 tons in 2002/03 based on forecast record production. The current year (2000/01) export estimate has been raised 11 percent to 15,500 tons, based on strong demand from the EU and the United States (due to a smaller crop). Major export destinations during the Indian fiscal years 1999 and 2000 were Spain, Egypt, Germany, Netherlands, U.K., Greece, Italy, and the United States. There are no restrictions on walnut exports and no government export subsidies. Given the high tariffs and strong domestic production, there are few opportunities for imports.
In 2001/02, Frances walnut production is forecast at 28,000 tons, close to its 2000/01 level. While the weather during the growing period has been favorable, storms in August 2001 have damaged the walnut crop in some regions, but it is still difficult to fully assess their impact. The crop is expected to be of average quality. According the various studies by the French Fruits and Vegetables Technical Institute (CTIFL), French walnut consumption has been relatively stable for several years, at around 17,000 tons. No significant change in consumption is expected for 2001/02.
The 2001/02 import demand for walnuts in France is not forecast to increase significantly, as the crop would be similar to last year. French imports of U.S. in-shell walnuts fell sharply in 2000/01, as the hike in value of the U.S. dollar made U.S. in-shell walnuts uncompetitive compared to shelled eastern European or Chinese walnuts, despite the superior quality of U.S. walnuts. For the same reason, French walnut exports rose significantly in 2000/01, especially to Spain. The United States lost its rank as Frances leading supplier of in-shell walnuts in 2000/01, replaced by Moldova and Austria, whereas Moldova provided the bulk of shelled imports. Germany is traditionally Frances principal export market for walnuts, although sales declined in 2000/01. Spain is also becoming a large customer for French in-shell walnuts.
The 2001/02 crop is forecast at 8,000 tons, down 50 percent from the previous year, due to the cyclical nature of the crop and weather developments. Weather conditions have been unfavorable, with cold temperatures reported in mid-April (following a period of unusually warm temperatures), which negatively affected the walnut trees. Production is not expected to expand in the near future, due to declining acreage and lower productivity of older trees. Italys walnut imports for 2001/02 are expected to increase 67 percent, due to decreased domestic supplies. Excluding minor quantities from France and eastern Europe, most of Italys imports are U.S. in-shell walnuts, which have accounted for over 80 percent of total in-shell shipments in the past 2 years.
Chiles 2001/02 walnut crop is forecast to increase 4 percent to 12,250 tons as a result of grafting of existing orchards to higher-yielding varieties, replacement of uprooted orchards with improved varieties, and overall increases in planted area. Exports are forecast to increase slightly in 2001/02, as a result of the higher output. Export volume is also expected to rise in the coming years, reflecting the forecasted expansion in production and better quality, once improved orchards come into bearing. Brazil is the largest Chilean export market both for in-shell and shelled walnuts, far surpassing any other market. Argentina is the second largest market for both in-shell and shelled walnuts. Exports are highly dependent upon Brazilian demand and prices. Only minute volumes of the highest-quality nuts, which can meet the often demanding size and grade specifications of customers such as Germany, are exported to Europe.
The FAS Attaché Report search engine contains detailed reports on Tree Nut Competition or Market Intelligence for 16 countries, including Chile, China, France, India, Italy, and Turkey. (For information on production and trade, contact Erik Hansen at 202-720-0875. For information on marketing contact Ingrid Mohn at 202-720-5330. Also, visit the tree nuts web page at: http://www.fas.usda.gov/htp/horticulture/nuts.html)