In the last few weeks, more snow has fallen on Turkey’s Black Sea coast than at any time in almost 20 years. Snowfall is nothing out of the ordinary, but it is pretty unusual in this intensity for March. Due to the snowfall, public life has come to a standstill in some places. Some villages are inaccessible and schools have been suspended in some areas. Truck traffic on the main roads is still functioning, but delays are expected.
Many exporters now expect the coming harvest to be damaged. The question is, however, how much this will be. It is not yet possible to make a statement on this because the effects on the bushes are not yet apparent. This will not be the case until next week at the earliest. Basically, the snow should protect the flowers from the cold temperatures at night. Also, the vegetation has currently not progressed so far that a frost should cause extreme damage. Therefore, at least the communication towards European buyers is still very cautious about it. In general, it seems as if the issue is somewhat sidelined in the wake of the conflict in Ukraine. However, almost all major exporters are currently buying up commodities. As a result, the commodity price has risen significantly during the week and is now at 39 TRY/kg for in-shell commodities. This corresponds to the selling price of the TMO. The latter has now been able to sell a total of 20,000 mt for the March tender.
In terms of export pricing, we see a further increase in inconsistency. While some exporters have already started to adjust the price lists to the increased raw material prices, others leave the prices untouched. Depending on the results of the assessment of the frost damage in the gardens, we expect a correction of the price lists towards the end of next week. Until then, uncertainty/caution should prevail.
While there is movement in the commodity market, it remains (surprisingly) quiet in the FX market. A few months ago, it was still an exciting event; this time, the meeting of the Monetary Policy Committee of the Turkish Central Bank hardly received any attention. As expected, it was decided to leave the key interest rate at 14.0%.
We expect little movement in the coming week, but we think the market will slowly pick up speed again after that. The balance of power between industry and trade is now changing and that trade is (forced to) accept price increases. Thus, movement is coming into the sluggish negotiations. The coming weeks will show where the (raw material) prices trend will go. Still, inconsistency in price lists will remain with us because every supplier has different motives to sell due to the different purchase prices of the last months, the different financing and the competitive situation. Therefore, for buyers, it continues to be said that it pays to compare. With all the focus on commodity prices, one should not lose sight of the exchange rate development. This continues to be the most significant lever in pricing and its development cannot be estimated.
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- Unusually large amounts of snow and low temperatures for the month of March give rise to fears of certain losses in the 2022 harvest. The first findings are expected at the end of next week.
- Many exporters are now (speculatively) buying raw material. This pushes prices up (from 37 to 39 TRY/kg).
- The TMO was now able to sell the entire quantity of the March tender.
- Export and domestic demand remain subdued; hazelnut kernels are not currently the buyers’ focus. This is one of the reasons why the market remains quite relaxed.
- The Turkish central bank leaves the key interest rate at 14%. The Turkish lira, therefore, remains “stable”.