Thanks for the wonderful question Bill!
Historically, there has always been a demand for black walnut; albeit the major demand is for high-quality, large diameter, defect-free logs. However, even small walnut logs can have value seeing that low grade walnut is almost never used for pallets. Even though your total yield of lumber may be low per tree (one eight foot log with an 8-inch diameter at the small end only yields 15 bd ft:Int. ¼ scale), the number of trees you selectively thin may produce a reasonable yield of useable walnut wood. The percentage of sapwood in young black walnut is typically significant; therefore, the yield of dark colored heartwood will usually be reduced – this may or may not be of concern to potential buyers of your material.
Marketing your timber, whether you have high-grade veneer logs or lower grade sawlogs, is the key to maximizing financial return on your investment. Some common uses of small black walnut logs that I’m aware of include gunstock blanks, turkey calls, turning wood, custom flooring & furniture, etc.
So, how does one find markets for small diameter wood? Well, that’s where one’s marketing genius comes into play. I believe a great outlet for small diameter logs is custom sawmill owners (portable or stationary) and woodworkers. Many of these individuals have niche markets that allow them to convert smaller logs into high-end products. Contact local foresters, custom sawmill operators, woodworkers, wood working groups, and forestry associations (Tree Farm, Walnut Council, etc.) for potential leads/outlets. Placing newspaper and internet ads (woodfinder/woodweb) can also be beneficial. Your local county, state, and consulting foresters should also be able to supply you with adequate leads for you geographic area.
Best of luck!