This week we saw a clear pick-up in demand in the Turkish hazelnut market. The reason for this was the incipient rise in the commodity price after some crackers closed their still open positions, indicating that they no longer expect prices to fall. In addition, buyers from Europe and especially from the Arab region were also active. While demand from the Arab region drove up the prices of large calibre nuts, the smaller calibres were hardly affected by the price increase for the time being. The increase can also hardly be seen in the export price lists yet, as the realised bids were mostly significantly below the exporters’ original price expectations and the euro gained in strength, thus concealing the price increases.
Discount battle
It is interesting that the enquiries from the industry that we are currently receiving tend to target the second and third quarters. For the first quarter, the covers seem to have already been made. One reason could also be that the sales of many nut products are behind expectations and therefore one can still manage well with the existing covers. Especially in the German retail trade, we are currently seeing a discount battle again for nuts as a baking ingredient. This is dampening exporters’ expectations of export figures, as many had still hoped for a strong first quarter.
Official investigation against Ferrero
In addition to the revival in demand, the hazelnut market leader was again the topic of conversation this week. After preliminary investigations, an official investigation against Ferrero was decided due to the violation of the Competition Protection Act No. 4054. The investigation is looking into a dominant position, abusive influence on the purchasing market, and practices of refusal to contract. The results of this investigation are to be made public after the conclusion of the proceedings.
Overcapacity of crackers?
Behind the proceedings is the increasing concentration in the industry. Until now, some crackers and exporters have worked for the hazelnut market leader and have been able to live quite well from it. However, Ferrero has now issued the motto that it wants to buy directly from the farmers in the future and is investing massively in its own cracking. Should this take place in the form that is assumed, it would lead to a massive overcapacity of crackers. Further concentration within the industry is likely to be the inevitable consequence.
Concerns of the exporters
In our opinion, the measures taken by the antitrust authority will perhaps slow down the process, but not stop it. However, it may have an impact on the pricing policy in the sale of processed by-products and this is also one of the concerns of the exporters. For instance, in the past, the market leader put a lot of emphasis on selecting its special calibrations and put the over and under calibrations back into the market. However, in the last few years, a large part of the product was processed by the exporters themselves and sold at prices significantly below the market price. The other exporters were powerless against this pricing policy, which has now led, among other things, to the measures being taken. It is therefore possible that changes are on the horizon. However, we do not believe that the market leader will be influenced too much.
Euro strengthened, what about prices?
We still have to look at the currency markets. After the euro strengthened again towards the end of last week, the changes have now found their way into the price lists of all exporters this week. As already mentioned above, the export price lists remain essentially unchanged, as the increase in raw goods was compensated by the exchange rate.
For the coming week, we expect continued interest in the hazelnut market, as traders and industry are now increasingly closing deals and the industry tends to close the open positions for the most part.
Bullet points
- Commodity prices are clearly up due to rising demand and further declining supply.
- However, the weakness of the Turkish lira largely compensates for the price increase.
- The TMO continues to buy, but the pace is now slowing down.
- Extreme differences in the price lists of the individual exporters continue.
- The Turkish Competition Authority has now officially started investigations against the market leader.
