In terms of trading, in Turkish Hazelnut Market, this week was another quiet week. However, we see that the market is now starting to be active to deal with the covers for the fourth quarter and the level now is tested.
Political factors
Looking at the raw materials market, it is currently determined by political factors. At the weekend, opposition challenger Kemal Kılıçdaroğlu went to campaign events on the Black Sea coast, after his colleague Ekrem İmamoğlu (acting mayor of Istanbul) had done the same. Both expressed their support to the population and proclaimed a high price for hazelnut kernels. The current election promise is the equivalent of USD 4/kg for hazelnut kernels in shell.
A price that, realistically, probably cannot be implemented without lasting damage to the market. President Erdogan is also expected in Ordu on May 4th. Unlike his challengers, his statements will be watched very closely. He is expected to make a statement about TMO’s new purchase price for tea (cay) for this season. From this price, one could derive the surcharge to compensate for inflation for the hazelnut kernels as well.
Fear of turbulence
The fear of turbulence on the foreign exchange market after the election has not only reached the export sector. Even ordinary people are afraid of it. Therefore, we have also seen this week that market participants have parted with raw materials and invested the money as a fixed-term deposit with a state guarantee on the exchange rate. This is also the reason why raw material prices have remained stable at a low level.
With regard to the offers for the current and the coming harvest, we are currently seeing major differences between the individual providers. Especially with regard to the coming harvest, it becomes clear that each supplier assesses the situation differently. It is therefore worth comparing.
From the middle of next week, the export union teams will start counting for the official harvest estimate. There are already statements from the major exporters that an average harvest of around 650,000 mt is expected. Overall, we believe that the harvest estimate will no longer have a major impact on market activity. Rather, the focus will be on the surplus, the consumption and the forecast consumption.
Regarding the exchange rate, there was little change this week. As expected, the Turkish central bank has not made any changes to the key interest rate in order not to cause unrest in the market before the election.
Depending on the individual market assessment, we expect that there will slowly be some movement in the market from the coming week.
Bullet Points
- Commodity prices remain stable at a low level.
- Increased interest in the current and upcoming harvest, but hardly any transactions yet, as there is still an orientation phase with very different offers and purchase ideas.
- Türkiye’s central bank is keeping interest rates stable. The Turkish lira is therefore trending stable to slightly weaker.
- Turkish political celebrities visit the Black Sea coast for election campaign events and promise farmers high prices.