Walnut grower and Walnut Bargaining Association Director Pete Jelavich, Yuba City, Calif., believes the Sept. 3 Walnut objective measurement estimate of 510,000 tons released by the USDA may be a bit high.
It is 17 percent larger than last year’s crop and, if realized, would be a third-straightproduction record.
“I, and the people I’ve talked with in the industry, doubt it will be quite that high, but we do agree that it will be a record crop,” he says.
One reason he’s skeptical about a 510,000-ton crop this year is that the average yield per acre to support that figure is very high.
Over the years, California’s walnut orchards typically produce 1.5 to 1.6 tons per acre. Two years ago, that figure jumped to 1.96 tons, or 3,900 pounds per acre. Last year, yields averaged 1.93 tons or 3,860 pounds per acre.
“For the estimate to be correct, we’d have to produce 4,500 pounds of walnuts per acre this year,” he says. “It’s hard for me to believe that this year’s yields will be roughly 600 pounds per acre higher than in 2009.
“Certainly, some of the newer orchards, where planting densities are as much as two to three times higher than older fields, are capable of that kind of production. But for all the state’s walnut orchards to be that much higher this year seems like a stretch to me.”
The latest objective measurement report also notes that this year’s average nut set of 1,690 per tree is 11 percent higher than 2009’s average of 1,523. However, estimated weight and size are projected to be below average for 2010.
“Add 11 percent to last year’s 436,000-ton production and you get 484,000 tons,” Jelavich says. “I’d like to think that’s in the ball park of what we’ll produce this year.”
Conventional wisdom has it that a bumper crop means lower prices for farmers, but as growers get ready to harvest what is expected to be the state’s biggest crop ever, they are in the enviable position of watching prices go up. Credit this apparent paradox to a worldwide appetite for walnuts that continues to strengthen.
“It’s an extremely exciting time for us,” says Jelavich. “This past year, our industry moved more than 107 percent of the record crop we harvested in the fall of 2009 and prices moved up almost 50 percent, from $2.35 per pound to over $3.50 per pound for light halves and pieces (LHP).
Jelavich expects the price growers receive for their crop and their profit potential this year to be even better. Here’s why he’s so upbeat:
The export prices announced Sept. 10 by handlers for this year’s crop are higher than opening prices for the 2009 marketing year. This opening export price is what handlers agree they can get for the first of the new-crop walnuts. It is the price a grower receives for walnuts, minus the handler’s margin and charges for processing and selling the product.
The export price tends to rise as the marketing year progress to cover the increasing costs of storing the nuts until they are sold.
The opening export price announced for in-shell 2010 Hartleys is $1.25 per pound, about 4 percent higher than last year’s per-pound price of $1.20. The combo price (darker-colored halves and pieces) was set at $2.45 per pound. That’s a 20 percent increase over 2009 prices, which were around $2. Meanwhile, the export price of $2.75 per pound for the more desirable light-colored halves and pieces, reflects about a 15 percent increase from $2.35 for LHP, while Chandler LHP usually bring another 10 cents per meat pound more.
“It’s important to note that there has already been movement of in-shell Hartleys at the $1.25 opening price and of in-shell Chandlers at their opening price of $1.35, “ Jelavich says.
Carry-in, as the 2010 marketing year gets under way, is just 30,000 tons of nuts.
“Right now, for all practical purposes, the industry is out of walnuts,” Jelavich says. “We started the 2009 marketing year with less than a 60,000-ton carry-in. That, plus the 436,000 tons of walnuts harvested in 2009, added up to a total supply of about 495,000 tons. Various handlers and other knowledgeable people in the industry tell me that we could have sold 500,000 tons last year, had the nuts been available when needed.”
So, he’s not too concerned about moving the 510,000-ton crop.
“We need walnuts to fulfill market demand,” he says. “I’m confident that the opening export prices are good numbers, and that our 2010 crop is marketable at those prices and higher."
However, he is cautious about becoming over-confident. He remembers well the fall of 2008 when the world’s economy suddenly nosedived. Theexpected in-shell walnut price of $1 per pound fell to just 60 cents. “Fortunately, we worked through the downturn and ended up with a manageable inventory to start the 2009 season,” Jelavich says. “The anticipated 30,000-ton carry-in would represent only about 6 percent of the projected crop. That is an extremely low number to start the marketing season.”