Just as the last trading week ended, this week started with the Turkish hazelnut market remaining firm. This remained the case until the middle of the week. On Wednesday, to everyone’s surprise, the TMO announced that it would promptly put 20,000 mt from the 2021 crop and 8,000 mt from the 2022 crop on the market. Bids can be submitted until Tuesday, 07 February. A decision on the bids will be made on 08 February.
As a first reaction, the raw material price in the Turkish hazelnut market dropped from 61.0 to 58.5 TRY/kg and the export price lists were also adjusted downwards. However, this should not be seen as a turnaround in the market, as raw material prices have already risen slightly again in the meantime. The TMO’s decision comes unexpectedly for all market participants and with significantly lower prices than had been expected. For one thing, the early timing is very unusual. Normally, a sale would not have been expected until the end of March. Also, it was not expected that the 2021 harvest would enter the open market.
Farmers Feel Betrayed
Farmers in particular have no understanding of the decision and feel betrayed. There is already a shitstorm against the TMO on social media. This is actually against what the state president wants for his re-election. The question why the TMO has decided this way is asked by many. On the one hand, there are rumours that the Export Union has put pressure on the Minister of Agriculture because the current market situation is very critical for some exporters. Whether this is the case can perhaps be seen from who will receive the awards on Wednesday. We hear that bids are being made specifically for the 2021 crop. We hear that individual exporters have already placed bids for the entire quantity. However, these are speculative bids and show that exporters are assuming that the commodity price will continue to rise. After all, the 2021 crop will probably be completely sold after this round and the 2022 crop will probably be offered for at least 3 TRY/kg more in the next sales round. On the other hand, there are also voices saying that the TMO should simply become liquid again. The sale will bring the equivalent of about 80 million euros into the TMO’s coffers, half of which is likely to be income.
Overall, the TMO’s action has caused a dent in the Turkish hazelnut market. The amount that is now flowing into the market, presumably about half of the amount still needed for this season, has dampened the speculative tendency somewhat and will probably have a calming effect for the coming weeks. However, we would not want to speak of a trend reversal yet. There is still too much uncertainty and, above all, speculation by the participants in the market.
Turkish Lira Continued to Trade Weaker
In addition to the decision of the TMO, which was related to commodities, there was also a lot going on in the foreign exchange market. This week, the central banks in the USA and Europe raised the key interest rates for the US dollar and the euro. As a result, the Turkish lira continued to trade somewhat weaker against the euro. This also had a positive effect on export price lists.
There is also reassuring news about the weather. On the Black Sea coast, temperatures have dropped to normal for this time of year. In the higher regions, there is now snow, which is quite positive for the bushes.
We expect a quiet start for the coming week. Wednesday will be exciting for us when we know who has received the corresponding awards from the TMO.
bullet points
- TMO shocks markets with an early partial sale of 28,000 mt of stock.
- Exporters signal great buying interest, especially in the position from the 2021 harvest.
- Commodity prices drop significantly due to the sale announcement.
- Farmers and some exporters are outraged by the TMO’s behaviour (too early, too cheap).
- The export price lists were mostly adjusted to the new market conditions.
- Exporters tend to show more willingness to sell again.
- The interest rate hikes by the Fed and the ECB put the Turkish lira under slight pressure again.
Please click to reach our marketplace