Why Does the Hazelnut Market React to Changes With Such Large Fluctuations?

The calming of the Turkish hazelnut market continued this week, even though there were repeated small deals for prompt delivery. It seems that the panic from the beginning of January has faded and exporters are reducing the risk premiums in their price lists. What we are noticing, however, is that the level at which the current deals are being concluded is often below the indications of the standard price lists, which means that some sellers are ready to reduce their position and now want to realize the deals.

Furthermore, a certain volume of contracts is still outstanding until the new harvest. Many buyers are currently considering how to proceed, as a number of assumptions (weather scenarios, size of the coming harvest, quality of the coming harvest, political factors, currency risks, etc.) are already causing uncertainty. What we have seen in recent weeks is that not much has to happen for the market to show large swings. The reason for this is that the amount of freely available goods remains relatively low, as certain groups are holding stocks speculatively and will probably continue to do so in the current situation. As already mentioned, sales have so far mainly been made against the exporters’ inventory position. Provided there is no frost, we do not expect the situation to ease until the end of April. By then, the local elections will have been held and the risk of frost should be averted. Until then, however, the market is likely to remain quite uncertain and speculative.

The behavior of the market leader?

The scenario that is currently being discussed the most is the behavior of the market leader. If it enters the market in the coming weeks with an adjusted purchase offer to close its inventory gap, this could quickly drive prices upwards. However, if the market leader reacts prudently, the market could remain at the current level. There are different assumptions regarding the market leader’s coverage situation, which is why it is almost impossible to make reliable forecasts here. However, a major downward correction is not necessarily to be expected, as no significant inflows of raw materials into the market are anticipated and the sellers know the volume that is still outstanding for cover.

There is still little change in the foreign exchange market. Although there is a certain amount of volatility, there are no recognizable influences that would significantly change the situation.

Bullet points

• Commodity prices at origin remain stable – however, export prices fall slightly (due to sales against inventory positions)
• The hazelnut market thrives on small deals for prompt delivery. There is virtually no long-term cover.
• The exchange rate shows a certain volatility over the course of the week, but compared to the week before there is a certain consistency
• Exporters are rather pessimistic about price developments in the coming weeks, although it should be put into perspective that this time of year is always characterised by rumours and uncertainties.
• The export price lists continue to vary greatly, depending on the position of the exporters.

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