U. S. Tree Nut Supply and Demand

As mentioned in our previous U.S. Hazelnut Market article, Due Diligence is the foundation of what we do at Scythe & Spade. We were recently engaged by a seller to represent them on the sale of an almond orchard north of Sacramento, California. This prompted us to take not only a look at the state of the almond industry, but at the U. S. tree nut market as a whole. In this multi-part series, we will contrast and compare Almond, Pistachio, Hazelnut, and Walnut costs and cash returns, historical production and export data. This post will use USDA, FAS, and WTO data to focus on US supply and demand.

For context, the US is by far the largest producer of Pistachios and Almonds in the world. It is the second largest producer of Walnuts, and the third largest producer of Hazelnuts.

US Production

In the past 10 years, Pistachios and Hazelnuts have seen the largest increase in production lbs. Pistachios are up 206.99%, Hazelnuts 188.74%, Almonds 32.09%, and Walnuts 30.56%. As seen in the chart below, tree nuts tend to produce on an alternate bearing cycle, producing heavily one year and lighter the following year. Some of the newer varieties coupled with the recent rise in Pistachio and Hazelnut plantings has softened this cycle to some degree as new orchards have started coming into production.

Exports

Based on USDA Tree Nut Yearbooks data, we calculated the percentage of US marketable production going to exports. The 10-year average shows Pistachios and Hazelnuts have the lowest percentage of marketable production going to exports (62.33% and 63.84%, respectively). Walnuts and Almonds have the highest (71.06% and 70.29%, respectively). Over the past 10 years, the percentage of Hazelnut and Walnut marketable production going to exports is trending down, while Pistachio and Almond are trending up. Also note that the proportion of nuts being exported is generally inversely related to cyclically higher production years in the chart above. In other words, years in which production is cyclically lower generally have a higher percentage of that year’s crop exported.

According to 5-year historical FAS data* (using the corresponding marketing year for each crop), Pistachios and Hazelnuts have seen the largest increase in exports both by value and by volume. Walnut exports have decreased in both value and volume. Almond exports have dropped by value and increased in volume. Hazelnut exports are the only one of the four crops to see an increase in export US dollars/pound (23.99%) while Almonds, Pistachios, and Walnuts have all seen a decrease in export US dollars/pound (-26.54%, -17.54%, and -15.86%, respectively)

*The FAS data includes shelled, in-shell, and prepared/preserved exports, which can skew the volume data and thus the price/pound.

Domestic Utilization

A review of the 10-year historical domestic availability as a percentage of utilized production shows hazelnuts has the highest average (66.57%), followed by Pistachios, Walnuts, and Almonds (39.72%, 30.13%, and 29.66%, respectively).

Imports

Imports make up less than 1% of total supply by volume for Almonds, Pistachios, and Walnuts (the 5-year average is 0.67%, 0.32%, and 0.43%, respectively). Because of the US’s relatively small part in global hazelnut production, we’ve historically imported a larger percentage of hazelnuts to meet domestic demand (5-year average is 14.20%). Hazelnut imports have steadily decreased over the past 5 years by 70% as new US orchards have started coming into production and domestic producers are better able to meet the growing demand.

Ending Stocks

A 10-year historical look at USDA data shows that, as a percentage of utilized production, Pistachios and Almonds average the highest ending stocks (24.76% and 20.72%, respectively). Walnuts and Hazelnuts average the lowest (8.70% and 8.91%, respectively).

Having a base understanding of the Supply and Demand for US tree nuts will help give us a better understanding of some of the factors driving the returns on US tree nut investments. Look for our next tree nut article where we’ll examine cash costs and cash returns for each of these crops.