Concerning the commodity market, the trend of the last weeks continues. Prices for raw commodities are gradually increasing (basic things in shell rose from 30 to 32 TRY/kg), but this is not reflected in all exporters’ price lists. We are currently observing a certain decoupling of market activity and suppliers’ pricing. For example, the price lists of some suppliers have been constant for several weeks, regardless of the development of the raw material price and the exchange rate. On the other hand, other suppliers continue to react to changes in commodity prices and the foreign exchange market and constantly adjust their price lists. The last three weeks, in particular, have brought extreme differences in offers, and it does not look as if a harmonisation of recommendations is imminent. Differences of more than 0.50 EUR/kg are currently not uncommon, especially for later dates in the season. Since many buyers are still without cover for this period, the question arises for many whether now is not a good time to make the remaining covers for the season.
Looking at the historical prices, we are currently below the long-term average, making long-term cover somewhat attractive. However, this was also the opinion a few months ago. With each passing week, we realised that the bottom had not yet been reached, which was almost exclusively due to the development of the exchange rate. This is no longer predictable due to the unconventional actions of the Turkish central bank. Currently, more and more voices in the market predict an immediate recovery of the Turkish lira if the central bank committee does not decide on further interest rate steps at the next meeting or if interest rates rise again. These statements are just as realistic as a different interest rate step downwards.
On the one hand, the protests in the big cities of Turkey are increasing due to the enormous inflation (a people is impoverished). On the other hand, the most influential Turkish interest rate policy is quite opinionated. More likely, like a concession by the president, is probably a measure like raising the minimum wage by about 25% (currently 3600 TRY gross per month). The inflationary spiral is, therefore, likely to continue. This would also have an impact on the hazelnut price. If inflation remains at this level, it is more likely that the current historic highs will continue. The danger we see is that if the Turkish lira suddenly gains in value again, we will see high price jumps very quickly. The question we have to ask ourselves at the moment is where the Turkish lira will be in six months and how the price of commodities will develop until then. This is a question to which no expert has an answer at the moment. That’s why most people are sticking to the strategy of covering sales and only building up small speculative holdings or following the market.
There are still no reliable figures on the distribution of raw material among the players. At the end of December, we should have a more accurate picture. The coming weeks are therefore difficult to assess. The market may decide to cover itself due to the current attractive level. But it may well also be that demand will remain absent until the next price jump comes, and then there will be quick action. In our view, a particular phase of relaxation would do the market well so that the price lists again “logically” adjust to the market price and exchange rate.
- After last week’s massive devaluation, the Turkish lira remained “stable” this week with only about 1% devaluation.
- The price of raw materials continued to rise significantly by about +7% within one week.
- Export prices remained stable overall, although there are still significant differences between the individual suppliers. It is worth comparing. Price lists are partly decoupled from market events.
- The distribution of raw materials in the market is still unclear. However, there are still relevant quantities in possession of the farmers.
- Alternative origins are currently rather unattractive in terms of price.
- The further course of the season is hardly predictable.
