This week, President Erdogan visited the cities of the Black Sea coast on an election campaign tour lasting several days. The announcement of the state-guaranteed purchase price for tea (Cay) on the first day was eagerly awaited. This is the first indication of the markup to be expected as inflation compensation on the future purchase price for TMO hazelnut kernels. At a 65% premium over the previous year, the price of tea was slightly lower than some expected, but the premium is still significant and would mean a significant gain for hazelnut kernels.
Did the president give a potential price like the other candidates?
Since the opposition candidates had already given a potential price, many expected that the President would also give a concrete figure during the visit. Therefore, many sellers withdrew to profit from a possibly higher price later on. However, the president made no statement in this regard. Many would have liked to see a figure in Turkish lira mentioned now. This would have reduced the uncertainty factor and, in the event of a devaluation of the national currency against the euro or the US dollar, would have led to lower prices later on, as the equivalent of, for example, 3 or 4 USD/kg would not have to be converted again. In any case, the opinion is firm that raw material prices in the coming season will be at least 20 TRY/kg higher than the current market price.
Large kernels are in short supply
Concerning the raw material market, it remains the case that large kernels are currently still in short supply. Cracking currently produces mainly small kernels. Therefore, small cores are currently quite cheap in relation to 11-13 mm and larger calibrations are proportionally much more expensive than normal. Many exporters are now taking advantage of the opportunity and are now covering small cores, as it is quite possible that these will become more expensive again at a later date. This has a correspondingly positive effect on the small calibrations of processed goods.
In terms of demand, there was a slight upturn this week due to inquiries for prompt delivery. Due to the current high competitive pressure, we see that some exporters are currently offering very aggressively, to the benefit of the buyer.
Concerning the coming harvest, opinions are converging towards a normal harvest of between 650,000 – 700,000 mt.
In terms of the exchange rate, we see some volatility, but the week closed similarly to the previous week’s level, so there was little change here as well. It is still unclear at the moment whether the euro will be able to gain again somewhat due to the ECB’s new interest rate step, which could correct prices again somewhat.
For the coming week, we expect a few more inquiries from security-oriented buyers before the final phase of the election campaign. This is currently dominating almost all media activity in Türkiye.
Bullet points
- Commodity prices remain stable, but export prices are softening somewhat as a result of the realization of some bids.
- There are currently large price differences between the various calibrations.
- The market is characterized by the uncertainty of the upcoming election.
- Discussion about state purchase prices for the coming season is now more concrete due to a 65% increase in tea compared to the previous year.
- Slight increase in demand by safety-oriented buyers before the election.
- Turkish lira with slightly more volatility but little change on average.