After the publication of the crop estimate last week, one actually expected a clear signal from the sellers this week. However, this failed to materialize. We continue to see the market split. On the one hand, we see sellers already entering the market with significantly reduced offers. Still, on the other hand, we also see sellers who are becoming increasingly cautious. One reason for this is that people do not trust the harvest estimate and that the TMO’s role in the market is not yet clear. Over the weekend, President Erdogan announced that the government purchase price for tea this year is expected to be over 70% higher than last year. Transferring this to the hazelnut market, one would have to expect a price of around 45 TRY/kg for the coming season, with the price in the free market likely to be somewhat lower. However, it would still be a price above the current market price.
As expected, there were significantly more inquiries again this week. However, buyer opinion now seems to be shifting back to one of wait and see. Nevertheless, we could see that raw material prices have risen again and there was also buying interest for TMO goods again. Therefore, it is far from certain that the market will follow the predicted downward trend. However, we see an increasing willingness among many sellers to bet on the further weakness of the Turkish lira. This gave in the course of the week already by more than 4%.
In the coming week, the monetary policy committee of the central bank will meet again. It is expected that the key interest rate will remain stable, as a further rate hike would probably fuel inflation even further.
We expect the demand situation to remain good for the coming week, but we also expect the market to stay divided. The validation of the harvest estimate is also still pending. Overall, however, we expect that the pressure from buyers and the risk appetite of sellers will ensure that prices are unlikely to rise. In the case of preparations, in particular, we see how competition among sellers is putting pressure on the market. The market has not yet found itself, but the trees will probably not grow to the sky for the sellers.
bullet points
- Market reacts inconsistently to the publication of the harvest estimate.
- Raw material prices rise significantly in the course of the week
- Weakness of the Turkish lira, however, almost compensates for the increased raw material prices.
- President Erdogan announced the state purchase price of tea at over 70% year-on-year. Exporters fear this scenario for the hazelnut market as well.
- However, competition and risk appetite of sellers are already producing attractive offers
- Behavior of buyers is interested but wait-and-see. Tendency not to cover long-term periods.