This trading week was interesting for us to see how the hazelnut market would deal with the new situation. It was essential to observe whether the market leader will be able to cover volumes at the price or whether the bid will be followed by a withdrawal of the sellers. What we have seen is that the market leader was able to cover partial quantities, but nowhere near the targeted volume. Many of the suppliers had previously purchased the goods at sometimes even higher prices and were therefore unwilling to sell at a loss. However, certain quantities were sold, as financing the goods is becoming an increasing challenge for suppliers.
Different strategy of the market leader
Overall, it is interesting to see that the market leader is now pursuing a different strategy than in previous years, when it bought large quantities in a short period of time and was thus able to more or less close the season. With its bid and especially with the new contracts for this bid (95 TRY/kg for hazelnut kernels in shell), it is sending a signal to its suppliers that it is possible to realise this level and wants to maintain a certain pressure and signal that higher prices are not desired. The big question is whether this strategy will be successful.
Suppliers holding back goods
The usual suppliers need higher prices in order to realise profits and are therefore holding back goods. Since this week, we have also noticed that hardly any raw goods are being sold at the local buying centres. As a result, we are seeing a rise in commodity prices at the end of the week. It should also be mentioned that the market leader has still only published one bid for hazelnut kernels in shell. In previous years, a price for natural kernels was already published at this time. We suspect that the market leader buys natural kernels from other exporters and has them loaded by them in order to avoid having to generate demand on the market itself. It can be assumed that the prices it pays here are higher than the bid for hazelnut kernels in shell. This could also explain the reluctance of some large exporters to adjust prices downwards.
Prices falling in Europe
In Europe, however, the picture is different. Here, prices have gradually fallen in recent weeks. This suggests to many buyers that they should continue to wait. The increasing activity of sellers also suggests that waiting is probably a good alternative.
In Türkiye, in particular, many factories still have large gaps in their order books, especially for the first quarter. They would like to close these gaps, but the prices at which this is possible, taking all costs into account, are not attractive for many. In general, we continue to see that smaller suppliers in particular can offer very attractive prices for prompt loading. The large sellers have generally already bought in certain quantities and are well above the most favourable offers in terms of price. It is also interesting to see that there is a great deal of restraint for later dates in the season. In general, the coming year is seen as a major challenge and exporters have respect for it.
In terms of demand, there continues to be a steady stream of smaller enquiries and deals. This is keeping the market going. We assume that the situation will remain the same in the coming weeks.
In terms of the exchange rate, the economic data and the decision by the European Central Bank and the FED (interest rate pause) have led to a slight strengthening of the euro, which has led to a slight weakening of the Turkish lira. The coming week will show whether this will have an impact on the export price lists.
Bullet points
- The market leader is able to cover a certain volume at its bid price of TRY 95/kg for hazelnut kernels in shell. However, this is only a partial volume. With regard to the purchase of natural kernels, there continues to be no purchase obligation.
- Commodity prices are rising again slightly – farmers and traders are now increasingly withdrawing as sellers.
- Export price lists fell slightly compared to the previous week, but the trend towards the end of the week was upwards again.
- There is a demand for exports that is fuelled by small and short-term contracts.
- Both buyers and sellers avoid long-term deals.
- The Turkish lira is trending slightly weaker against the euro.
- The export price lists are still very heterogeneous. It is worth comparing.