As expected, last week was another good trading week for the hazelnut market. The exporters were able to book a few more deals.A key factor in the buying decision, apart from the level considered attractive by many buyers, as well as the concern about the central bank’s decision. After the Turkish central bank raised interest rates significantly last month, but less sharply than the markets had expected, there was a lot of anticipation this week as to whether there would be another clear would come. However, the markets were disappointed again. The key interest rate was raised once again but only by 2.5% percent to 17.5%. The Turkish lira was unable to benefit from this and therefore remained more or less stable. This is advantageous for the hazelnut market in that no major distortions in the exchange rate disrupt sales activities.
Raw material prices are stable
Otherwise, the market in Türkiye is quiet. Many people in the hazelnut market are now on holiday in turn, before the new season starts. Raw material prices are also still surprisingly stable. However, we are noticing that some trends are now forming. For example, interest in goods from the TMO is increasing from exporters. However, it is also the exporters who are continuing to represent a harvest estimate of 790,000 mt. The agricultural union is expecting about 720,000 mt and some exporters are expecting less than 700,000 mt.
So we continue to have a wide range in terms of future expectations or one can guess the positions of the participants from this. The sum of the exporters do not seem to be interested in rising prices. Many pre-sales have been made at a low levels, so a low crop with high prices would not be a desirable option. What we also continue to see is that offers for the coming crop differ significantly between the suppliers. It is worth comparing.
Weather situation
In terms of the weather situation, last week was a very hot week, and also the coming week is forecast with temperatures of over 30°C. Due to all the rain in the past weeks, this should not be a problem, however, there are already many voices that the heat will cause stress to the plant and small seeds. It is quite possible that
the coming harvest will not be the best in terms of quality, but we do not believe that this is relevant for the market development at this time.
The situation could be different in Italy. The high heat and drought there could again lead to small kernels and a low yield. Exporters are therefore hoping for more orders from Italy, similar to this season.
After many deals have been closed in the last few weeks, we expect the coming week to be a little quieter. The next impulse for the market is likely to come from the TMO. Either with a decision to sell the inventory or with the publication of the new purchase offer.
Bullet Points
- The Turkish central bank disappoints again with a timid rate hike (+2.5% to now 17.5%)
- The Turkish lira can hardly benefit from the interest rate hike and remains relatively stable.
- Commodity prices also remain almost stable.
- Price lists for the 2022 and 2023 harvests are very different – it is worth comparing.
- The market is waiting for a decision from the TMO to have clarity for the coming season.