The new trading week started in Turkish hazelnut market similarly optimistic as the last trading week closed. However, the Turkish administration managed to dampen the emerging optimism already on Monday. On Monday afternoon, the TMO published a tender for 23,000 mt of hazelnut kernels in shell. The main quantity was offered at 68 TRY/kg. The price in the open market at that time was 61 TRY/kg.
Why did suppliers withdraw offers?
As a result, most suppliers withdrew the offers for the time being to observe the reaction of the market. As a first step, we then saw that the market first jumped. In the course of the week, however, prices dropped again in hazelnut market slightly. The reasons for this are, on the one hand, that the exchange rate continued to weaken and also that demand (for the current harvest) is no longer as high as in the previous week. In addition, it can also be observed that not all exporters are responding to the TMO’s tender. The TMO is still accepting bids until the end of next week, but as of today, there are reportedly not even bids for half of the quantity. It seems that the market is now essentially covered for the current crop. Many buyers have already taken advantage of the favorable situation in the past week.
The situation is not getting any easier for the TMO. If it still wants to part with goods, it must do so now. If the coming harvest is available in hazelnut market, it will have to buy again and it can be assumed that it will also receive large quantities. However, it will not be able to get sales through during this period because of the large number of raw commodities that will then flow into the market. At least not at the level it is currently aiming for because that level can also be expected in the free market towards the new harvest.
Therefore, it makes no sense for exporters to build up stocks at the moment. We will have to wait for the coming week, but the behavior of exporters is rather cautious at the moment, which suggests good cover or the expectation of low price increases that do not justify expensive storage (financing).
The outcome of the Monetary Policy Committee
The coming week will be an exciting one for hazelnut market. Although there are no longer large quantities to cover in the third quarter of 2023, there will probably still be a few requests. So it should be another active week. It will also have to be observed whether there will be other interested parties for the commodity tendered by the TMO. Most important, however, will be the outcome of the Monetary Policy Committee meeting of the Central Bank of Türkiye on Thursday. For the first time, this will be under the leadership of new central bank chief Hafize Gaye Erkan. Some analysts expect a strong sign. Should this be the case, a turnaround or at least a stabilization in the exchange rate would be possible. This in turn could have an impact on export price lists.
For the current crop, it seems that the point of lowest commodity prices has now been reached; we can now expect a gradual alignment with the expected level of the coming crop. Although we have seen lower indications on average this week, the market now seems to be picking up commodity prices.
The price lists for the coming harvest were much less affected by the events this week, as the scenario based on which the prices were given has not changed significantly. Currently, the first major tenders are underway and we expect the first major deals to take place in the coming weeks.
The coming week should be watched very closely, as it will provide information on exporters’ strategies, customers’ buying behavior and Türkiye’s monetary policy.
Bullet points
- TMO tender temporarily unsettles sellers.
- However, exporters’ interest in the tender is low.
- Commodity prices rise again due to good demand and the TMO tender.
- Turkish lira continues to weaken.
- Now that almost all the remaining quantities of the current harvest have been covered, buying interest is shifting to the coming harvest.
- The market eagerly awaits whether the Turkish central bank under new leadership will change monetary and interest rate policy next week.
- The market is currently being closely monitored.