The global walnut industry shows signs of slowing down, according to RaboResearch’s global walnut report.
RaboResearch analysts said the international walnut industry is facing significant challenges that affect production and trade, including drought conditions, water regulations, rising costs, logistic hurdles, competition and slowing demand. These challenges create downward pressure on walnut prices, and as a result, growers will reduce acreage in key regions, according to the report.
Analysts said exports from Chile and China will decelerate, while the U.S. will sustain its share.
The RaboResearch report said growers will reduce acres of less competitive walnut varieties and in areas with stringent water constraints.
“The industry’s focus is now on enhancing efficiency and producing higher-quality walnuts to achieve a more balanced supply-demand equation,” David Magaña, senior analyst of fresh produce and tree nuts for RaboResearch, said in a news release. “Although prices are showing signs of recovery, they continue to linger below the breakeven point in certain regions. But we remain optimistic about the potential for profitable operations in the near future.”
RaboResearch reports global walnut production has seen a compound annual growth rate of about 5% in the last 10 years. The regions and countries that make up about 89% of the global walnut output include China (48%), the U.S. (27%), Chile (7%) and the European Union (6%). The report said countries such as China (5% CAGR) and Chile (13% CAGR) have shown growth, and the U.S. and EU both have moderate growth rates of 4% CAGR.
Despite global growth, RaboResearch said it expects this trend to plateau as some of the largest producing regions will slow and reduce production due to economic and environmental pressures.
However, the trend of increasing production is set to plateau, with some of the largest producing areas expected to witness a gradual decline in acreage due to economic and environmental pressures. The phasing out of older, less productive orchards and traditional varieties is anticipated to be a key factor in this reduction.
China, the EU, the U.S. and Turkey represent 75% of global walnut consumption, and RaboResearch said the United Arab Emirates and India show significant growth, 23% CAGR and 12% CAGR, respectively. The report shows the fifth-consecutive year in which domestic production will surpass consumption in China by more than 100,000 metric tons. The report shows a stabilization of walnut production and exports from China in the coming years.
The EU (31%), Turkey (11%), United Arab Emirates (9%), Kyrgyzstan (6%) and India (5%) make up 62% of global walnut imports, according to the report. RaboResearch said imports have shown huge increases in CAGR in the last five years in India (25%), UAE (18%) and Kyrgyzstan (15%).
RaboResearch said it projects exports to slow from Chile and China and exports from the U.S. to maintain its share of 45% to 50% of the global walnut market.
“The trajectory of global walnut exports has been remarkable, soaring from around 300,000 metric tons in the mid-2000s to approximately 1 million metric tons in recent seasons,” Magaña said. “The past decade has seen a 7% CAGR in exports, with notable increases from China, Chile, and Turkey. Despite a reduction in its export share from 64% in the 2014-15 season to about 45%, the U.S. remains the leading exporter of walnuts.”
