Turkish Hazelnuts: Lack of demand

This week there are more incidents on the political level than specific events in the hazelnut market. There continues to be little demand from Europe, but the Turkish domestic market is also showing weak demand. However, this does not mean that the producers are doing badly because the exports are still very good. By the end of January, more than 190,000 mt had already been exported. Therefore, we are very confident that we will reach the target of 350,000 mt. However, according to our information, some contracts still need to be concluded.

While the hazelnut market is in a relaxed and wait-and-see mood, the mood in Turkish society is getting worse and worse. After the head of the state statistics authority had to vacate his chair in recent weeks because he had portrayed the economic situation worse. The presidential decree hit the Minister of Justice this week. He was “too constitutional” for the hardliners. Above all, however, the criticism of a campaign against the popular Istanbul mayor Ekrem Imamoglu was probably a drop too many on the hot stone. Although the next presidential election will not occur until 2023, the election and power struggle are already in full swing. Against this backdrop, one should not forget that there is a risk of potential state intervention in the coming hazelnut season, e.g., attracting farmers as voters. Election gifts are likely to be welcome, as the “ordinary” population, in particular, is suffering massively from inflation. In January, the state statistics office announced an inflation rate of 48.7%. (December 36% and November 21%). Especially the high energy and food prices are causing a lot of discontents.

Although Turkish inflation was a front-page topic in the European media several times, the Turkish lira reacted relatively calmly to this news, as several indicators had already pointed to it beforehand. The majority of experts continue to expect a weak Turkish lira. It is assumed that further interest rate steps will follow and that the guarantees and restrictions that have been issued will not be sufficient. Experts see a real turnaround in the “Turkish experiment” in the event of an opposition victory and a return to an independent central bank. This could then either carry out an “emergency interest rate hike” or restrict access to foreign currencies to strengthen the national currency’s exchange rate again. However, since no early elections are considered realistic, this is a scenario for 2023.

Prices slightly decreased

In sum, prices have again declined slightly compared to the previous week. Both commodity prices and the exchange rate developed positively for buyers. However, we do not consider the situation stable, as some sellers tend not to pass on the advantages to customers. A strengthening of demand would thus quickly lead to an upward correction of prices. However, this is not expected to happen in the short term because it is still too early to make weather/vegetation-related statements. The TMO’s position is not expected for another three weeks at the earliest. Therefore, it is essential to continue to observe the market closely.