At current price levels, China will likely import less U.S. almonds, pistachios, and walnuts due to the additional import tariffs placed on U.S. tree nuts; however, it is unclear if Chinese importers will be able to fill the gap by increasing purchases of alternative nuts (such as macadamia nuts, cashews, and Brazil nuts) from third countries. China’s in-shell walnut production is forecast to decrease by 15 percent to 850,000 MT in MY 2018/19 as a heavy snowstorm in April will likely reduce production in northern producing provinces. Shelled almond production is forecast at 43,000 MT, unchanged from the previous year.
The San Francisco Chronicle recently reported that…
“The escalating trade war between China and the United States is threatening commerce worth hundreds of billions of dollars, but some businesses in California appear to be particularly at risk. The state accounts for around 90 percent of all U.S. wine production, as well as most of its almonds, walnuts and other crops. Many of those products are subject to new tariffs, which mean a swift change of course for farmers, vintners and others who were counting on China as a market.”
“Julie Adams of the Almond Board of California said most of the agriculture community in the Central Valley is worried about the new tariffs. We’re a very important product here in the valley, and a lot of communities really rely on almonds for their livelihood, so anything that can disrupt or impact trade is a concern,” Adams said. Adams said when the steel and aluminum tariffs were imposed in the spring — the first salvo by the Trump administration against Chinese imports — there was some hesitancy from importers to place orders.”
Last year, California exported 170 million pounds of almonds to China and Hong Kong, the California almond industry’s third largest export destination.
Because China has enacted a number of additional tariffs on U.S. products, Chinese importers will be less likely to purchase certain tree nuts from the United States. The market share once occupied by the United States will be difficult to fill by other competitors due to limited substitutable suppliers. Further exacerbating the problem, China recently tightened control over imports transshipped through border programs. As a result, Chinese buyers are looking for other import sources and will probably increase purchases of alternative nuts, such as cashews and Brazil nuts. In spite of increased world pistachio supplies as a result of a rebound in U.S. production, China’s pistachio imports (in-shell basis) are expected to decline during MY 2018/19 (September-August), largely because of fewer purchases from its largest supplier, the United States. Chinese importers are seeking substitute supplies from other producers such as Iran, the second largest pistachio supplier to China, but a sharp production decrease in Iran will likely limit it as an effective substitute exporter in 2018/19. Other producers, including Turkey and Syria, have no direct access to the China market. Pistachios were China’s number one imported tree nut in 2017, according to a report by INC. Although China’s imports of almonds, shelled products in particular, have been on the rise over the past few years, import volume is projected to fall sharply during MY 2018/19 (August-July) due to the increased tariffs on U.S. nut products. Currently, more than 95 percent of China’s almond imports come from the United States. Although Australia also exports almonds to China, its exportable supplies are far from enough to satisfy the China market. China and Hong Kong together consumed around 7 percent of the world’s almonds in 2017, according to a U.S. industry report. China’s walnut imports are expected to further decline in MY 2018/19 (September-August) from the previous year, partially because of increased tariffs on products from the United States, which in the past has been China’s single largest walnut supplier. Although Chinese importers are searching for substitute products from Chile and Australia, their available supplies can hardly fill the gap. On the other hand, China’s overall imports of walnuts, especially in-shell products, have been falling from its peak in 2012, mainly because of rapid increases in domestic production.
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