After we were able to note falling prices in the Turkish Hazelnut Market for the first time last week, it was pleasing to see that the trend continued this week. However, exporters do not want to talk about a turnaround yet. The reason for this is the behavior of the market leader. So far, the market leader has only been able to cover a part of the required goods, as its purchase bid of 79 TRY/kg is far below the current market price of approx. 95 TRY/kg. Currently, the market leader is still receiving deliveries from contracts concluded in the run-up to the harvest, and it also has certain stocks that serve as a buffer. However, it is assumed that this buffer is also slowly used up and the market leader is forced to act.
Market leader is surprisingly calm
In our opinion, the market leader is surprisingly calm. It seems to be aware that hasty buying behavior could have a negative impact on prices. Analogous behavior is also reported to us from other origins. Provided that in the background no arrangements with the state organizations took place, one can assume that in the coming week probably a purchase bid will be published, which will be slightly above the current market price. However, it is also possible that purchases will continue to be made through other exporters and that there will be a statement that no buyers will take place for the time being.
Overall, we sense from the buyers that the level has now arrived in the hazelnut market and people have begun to come to terms with it, although there is still no understanding. Most assume that the level will not last, so the buying behavior is currently very short-term and we assume that this will remain the whole season.
What is TMO doing?
The TMO has so far defied pressure from exporters to put goods on the market. Most no longer expect to do so this year and have begun to reassess the situation. We are now hearing of the first renegotiations in relation to contracts made in the period before harvest. This is not conducive to the reputation of the origin. Overall, the TMO can be satisfied with this season. It only had to purchase a quantity < 10,000 mt this year and can still continue to pursue pricing policies.
Export figures significantly down
It is interesting to note that export figures are only slightly behind those of the previous year, despite the almost two-week delay in harvesting. However, the figures are significantly down on previous years. It will probably not be possible to say anything about the impact of prices on the season until the first quarter of 2024, as presumably a large proportion of deliveries in Q4 2023 will still be deliveries that were agreed in advance of the harvest.
A look at the foreign exchange markets shows that there was little movement there as well. The Turkish lira was slightly weaker, but this did not have a significant impact on the price lists.
A reaction from the market leader is expected
As already mentioned, we expect a reaction from the market leader in the coming week. Should this fail to materialize, it is quite possible that the price lists could still be revised downward a bit. As we see it, the current lists still retain significant risk premiums for most. We don’t think these can hold at that level for long. However, should a high purchase bid from the market leader follow, the hazelnut market could pick up again slightly. Exporters are currently acting with corresponding caution. Overall, however, we see the market coming back to (new) normality.
Bullet points
- Commodity prices, as well as prices in the export price lists, weaken slightly again
- Many price lists still contain a risk premium, although this is decreasing
- The market leader continues not to react to the changed situation – for the coming week, the publication of a purchase offer for natural kernels is expected.
- TMO continues not to react to pressure from exporters
- Turkish lira tends to weaken slightly during the week, but this has little impact on price lists