With California’s walnut orchards showing signs of producing a better crop than last year and walnut prices in early July higher than a year earlier, long-time Sutter County walnut grower Pete Jelavich was upbeat about the market potential for this year’s crop.

“The crop and the market both look promising,” says Jelavich, who farms in the Yuba City, Calif., area. “That’s a good combination. Barring any extensive insect pressure or extreme sunburn damage between now and harvest, growers should enjoy a good year.”

From prior to the start of last season’s harvest in September through the end of last year, the in-shell Chandler price paid to growers increased nearly 10 percent, strengthening from about $1.80 per pound to around $2 per pound. They’ve remained at that level ever since.

In each of the previous four seasons, walnuts prices have increased during that same four-month period. “Prices have been rising nicely, indicating a very solid walnut market,” Jelavich says. “Movement for this year is identical to last year, yet prices have gone up considerably.”

Currently, handlers have only limited inventory of old crop walnuts available for sale, Jelavich notes. So with little trading any speculation about where prices are likely to go between now and the start of this year’s harvest is just that.

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The industry will get some clues later this month when handlers release their estimate of the 2014 crop size. A more definitive picture will emerge on Sept. 5 when the USDA’s National Agricultural Statistics Services is scheduled to announce results of its annual pre-harvest Walnut Objective Measurement Survey of California orchards.

Over the previous three years the state’s walnut crop has varied in size from 461,000 tons (in-shell) in 2011, to 497,000 tons in 2012, to 489,000 tons in 2013.

Reflecting the relatively dry weather this season, which has kept a lid on disease outbreaks, Jelavich and other observers he’s talked with expect production this year to range from about 510,000 to 540,000 tons, maybe even up to 550,000 tons. These figures compare to the record-large 503,000-ton crop growers harvested in 2010.

Should harvested tonnage reach the higher end of that range, walnut prices could begin to soften somewhat. Jelavich, for one, would prefer a larger crop with prices softening somewhat rather than a smaller crop with higher prices. That would facilitate movement into the trade and should not reduce total returns for growers, he explains.

“The market will begin adjusting to the size of this year’s crop, once we start harvesting and selling the nuts,” Jelavich says. “But, if prices of 2014 walnuts start out at the higher end of last year’s prices, it would indicate that demand for walnuts is remaining strong.”

Meanwhile, Jelavich has heard of no shortage of water for walnut orchards. “So far, the supplies of water for this year’s walnut crop don’t seem to be the concern it is for almonds,” he says. “Generally, walnuts have been planted in areas of better water availability than almonds. So, unless water tables start dropping, the current drought should not have a big impact on this year’s walnut crop.”