The first week after the elections and the INC brings more movement to the hazelnut market. Despite the absences of many buyers due to holidays, there is a clear increase in demand and also some deals, which, however, still concern prompt deliveries or deliveries in the third quarter. Concerning the new 2023 harvest, there is still no clear line to be seen. Opinions and prices are clearly diverging here.
A price of around 75 TRY/kg
Concerning the development of raw material prices in hazelnut market for the coming harvest (hazelnut kernels in shell), the opinion is slowly beginning to consolidate that the TMO will quote a price of around 75 TRY/kg. It is then expected that the price in the open market will be around 65 TRY/kg in the main harvest season. Depending on what the market leader will offer.
For comparison, we are currently at around 54 TRY/kg on the open market. This means a clear plus, so higher offers for the coming harvest can be considered quite realistic. Nevertheless, most prices, especially for processed goods, that we hear for the fourth quarter are at somewhat the same level as current prices. This is only possible because sellers are speculating on an increasing weakness of the Turkish lira. The course of the current week also encouraged the speculators in their actions, as the Turkish lira lost almost 5% of its value against the euro this week. There were corresponding corrections in the export price lists.
A deceptive picture
Overall, however, it is a deceptive picture. The level we have in the market at the moment does not reflect the realities. Although we also have good demand in the Turkish domestic market, there is below-average activity. It is starting to be felt that liquidity has been withdrawn from the market. Thus, many smaller players have put their money in the bank and invested it at interest rates of around 40% with government-guaranteed value stability (against the US dollar). This is why there are always sellers who sell their goods below market price to invest the money afterwards, as the return is much higher than could be achieved by selling hazelnut kernels.
In summary, this is a very unhealthy development, but it could also lead to hazelnut kernel prices being even further below the TMO price in the free market as a result if the government maintains the instrument until then. We see once again that harvest volumes and even government-guaranteed purchase prices cannot in the end be the decisive factors for price formation.
New/old situation in Ankara
At the weekend, President Erdogan presented his new cabinet. With Mehmet Simşek as Minister of Economy, the markets are hoping for a positive signal. It is not yet clear how the international financial markets will assess the new/old situation in Ankara. The events of the first week cannot yet be interpreted as a trend. However, many already see it that way.
Concerning the 2023 harvest, there are more and more voices saying that the published harvest estimate was too optimistic, but this currently has no impact on the market, as almost all buyers have adjusted to a falling market due to the global oversupply, which only the market leader is not yet reflecting at the moment.
As the price level is now significantly more attractive again, we expect activity in the coming week to be similar to the current week.
Bullet points
- International financial markets send the Turkish lira on a downward slide. It loses almost 5% compared to the previous week.
- Commodity prices are again falling slightly. Sellers currently prefer to have the money in their hands rather than the goods in their warehouses.
- Export price lists are corrected downwards accordingly. The market reacts accordingly.
- The new Turkish cabinet will be presented at the weekend; the reaction of the financial markets is still pending.
- Demand in the Turkish domestic market is also good.