The past week was also characterised by low export activity, but important events were certainly to report on the domestic market. On the one hand, the Export Union published its first harvest estimate. This is based on the counting of (female) flowers. Based on this figure, a harvest of about 790,000 mt was predicted. However, this is only a first indication that can exclude extreme situations. Not every flower develops into a nut and this figure will be corrected downwards every year due to weather conditions. Usually, the correction is around 10%. So we expect an average harvest. (For comparison, last year, the estimate was over 900,000 mt).
However, the most important point of the week is the cold front that hit Turkey towards the weekend and caused large amounts of snow and low temperatures. Critical in the forecast was the night from Saturday to Sunday, as temperatures as low as minus 12°C were reported for the western growing areas. This is the critical value at which the young female flowers are damaged. Usually, however, this is not yet critical, as the snow protects the flowers. The problem, however, is that it gets so warm during the day that the snow on the trees melts and the flowers are exposed to frost again at night. Therefore, the night from Sunday to Monday will also be critical. What is also different from previous years is that the coldest temperatures are reported for the western growing regions, which are normally spared the frosts.
Accordingly, exporters were already uncertain when submitting offers towards the end of the week. How great the uncertainty was, however, became apparent on Friday afternoon when it was announced that the TMO had now sold 16,000 mt of the 20,000 mt in the March tender. The price in the open market on Friday was still 37 TRY/kg and the TMO’s price is 39 TRY/kg. This shows the uncertainty of some exporters. It is also expected that the remaining approx. 4,000 mt of the TMO’s March tender will be sold on Monday, as we expect a chaotic market next week. It will take at least one to two weeks to see if the bushes have taken any damage. Restraint or risk premiums and a very inconsistent price picture should characterise the situation until then.
But even without the weather incidents, there has already been movement in commodity prices this week. After the lira weakened again, commodity prices rose again. In the course of the week, prices climbed from 35 TRY/kg to 37 TRY/kg. Accordingly, the price lists varied again, which has to do with the exporters’ different purchase prices and the financing of stocks.
In the week after next, the Central Bank’s Monetary Policy Committee will meet again with an uncertain outcome. Therefore, the coming week should be quite an exciting one, whereby we expect a certain course to be set for the week after next.
Bullet points
- Export and domestic demand remain subdued.
- Adjustment of commodity prices due to weaker lira and expectation of frost damage.
- Cold front hits Turkey over the weekend with very low temperatures for western growing areas.
- TMO may sell offered stocks after all as exporters expect frost damage.
- Effects of cold temperatures will be visible in 1-2 weeks.