Turkish Hazelnut Market: There were two important events this week. On the one hand, the export union published the official harvest estimate at the INC in London on Wednesday, and on Sunday there was the run-off election between the two presidential candidates Recep Tayyip Erdoğan and Kemal Kılıçdaroğlu. No big surprises were expected in the run-up to either event, and they did not happen in the end.
Let us first look at the result of the run-off election. According to predictions, President Erdogan won the election with about 52% of the vote and is expected to preside over a divided nation for another 5 years.
On the one hand, the hazelnut market is relieved about this result but is far from happy about it. Unlike the opposition (the equivalent of 4 USD/kg for hazelnut kernels in shell), President Erdogan had not made any promises regarding hazelnut prices in advance. Therefore, the commodity market is now reacting with tendentially weaker prices in combination with the positive harvest outlook. Added to this, however, is the fact that one must continue to expect an unorthodox manner of intervention in the market by government organizations in the coming years.
No effects on the exchange rate can be deduced at present. There have been no big jumps in the exchange rate. Thus, one rather expects a steady downward trend. The next meeting of the Monetary Policy Committee will be on 22 June, when we will see whether the monetary and interest rate policy will continue to be pursued in the current way.
Crop estimate
As already mentioned above, the Export Union published the official crop estimate at the INC in London on Wednesday. This time there was no surprise. With 810,000 mt, the figure already mentioned in advance was published.
It is interesting to see once again that especially in Türkiye, the forecast of the previous year deviates by almost 10% from the actual season. In addition to the deviation in crop size, however, it is mainly the disappointment in global consumption that is causing concern among producers and a steady increase in surpluses, especially in Türkiye.
Optimistic harvest but…
Apart from the deviation in the course of the current season, a very optimistic picture is also forecast for the coming season. A very optimistic harvest is again predicted for Türkiye, but all other origins also expect good harvests. In addition, a significant increase in global consumption is predicted. We do not see this coming about because of increasing demand. Only cheaper prices would help to boost sales and here Türkiye is in the position of the driving force or market leader, on which many other origins orientate themselves. However, due to the oversupply, we assume that alternative origins will have to/will slowly have to deal with independent strategies.
Surpluses continue to increase
In sum, we are not learning anything new. There are more than enough nuts, the surpluses continue to increase and sales cannot be increased to the extent that would be necessary. It is also possible that the harvest forecasts are somewhat exaggerated. We suspect that the oversupply is intended to put pressure on politicians and producers to start the coming season with the lowest possible price. The hope is that low prices will increase sales.
Towards the end of the week, we registered a significant increase in inquiries. Slowly, the market is beginning to think about the coming season and to plan the last quantities of the season. However, most of the inquiries received have not yet been concluded.
Bullet points
- President Erdogan wins the run-off election. Thus, no serious political changes are to be expected. Only the extent of the support for the national currency remains questionable.
- Export Union publishes a positive harvest and sales forecast at this year’s INC in London.
- The financial markets have so far reacted calmly to what is happening in Türkiye.
- The commodity market tends to react with relief to the above-mentioned events but has so far had little influence on the export price lists due to the low trading volume.
- Following the publication of the harvest forecast, we are registering an increase in enquiries.
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