After the last weeks were characterised by very different views of the various suppliers, we are now slowly seeing an evolving scenario shared by most suppliers. Although there is no official confirmation yet, most of the exporters assume that the TMO will offer farmers 45 TRY/kg for the hazelnut kernels in the coming season. Based on the experience of the last years, it can be said that the free market will then probably settle at around 43 TRY/kg. On this basis, most exporters have now started to offer. However, we still do not have a uniform picture because while some take the current exchange rate as a reference, there are others who already include a certain devaluation of the Turkish lira until then.
Due to the current expectation, the prices for the current crop have already begun to adjust upwards to the expected price level. Thus, at the end of the week, the free market was already quoted at 41 TRY/kg for hazelnut kernels in shell. This is also in line with the TMO’s selling price. The latter was apparently able to sell about 17’000 mt into the free market this month and another 4’000 mt to Fiskobirlik. Thus, about 40,000 mt out of a total of 70,000 mt were marketed. For the remaining 30’000 mt, there is no new tender yet. This is expected for next week, but probably at higher prices. Looking at the exporters’ price lists for old and new crop, we do not see any significant differences at the moment. Partly, the coming harvest is now offered without a premium. However, the prices are below the previous week, also due to exchange rates. Here, the advance of individual sellers also plays a role.
Nevertheless, the market still does not get going. Many buyers are still hesitating and speculate about a further drop in prices due to the exchange rate. The Turkish lira has lost about 11% of its value against the euro and 9% against the U.S. dollar in the last month. The previous year has shown that it can be advantageous to cover in the short term, so buyers tend to cover only quarterly. Since Turkey drives a very idiosyncratic course both domestically and externally, the exchange rate development is not assessable. However, the central bank at least kept the key interest rate stable at 14 per cent again this week and thus did not pour any more oil on the fire of inflation.
In addition to the export business, the Turkish domestic market is also relatively quiet at the moment. It’s not high season either. Since pistachios are currently experiencing a surge in price, there is a shift in demand towards hazelnut kernels, but this is not significant for the overall market.
In addition to what is happening in the market, the increased production costs are increasingly preoccupying sellers. Many have not yet adjusted their calculations to reflect this. But also the costs for financing and transport are slowly reflected in the premiums between EXW and DAP quotations.
Overall, we see that despite government intervention in the market, competitive pressure continues to work well and is in the interest of buyers. The great speculation is out of the market and we sense an increasing interest in selling to fill the order books. Since the market leader has not yet become active, its reaction can still lead to counter-reactions in the market, but the behaviour has been relatively passive this season.
bullet points
- Scenario for crop transition is emerging. Exporters expect TMO purchase bid of 45 TRY/kg and a free market price of around 43 TRY/kg.
- Raw material prices continue to rise during the week. It is expected to align with the price expectation of the new crop
- However, the weakness of the Turkish lira is masking the rise in commodity prices, export prices are softening due to the exchange rate and competition.
- Sellers are now beginning to aggressively with offers.
- Behavior of buyers continues to be interested and wait and see. Tendency not to cover long-term periods.
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