In the hazelnut market, the predominant topic this week has been the regional elections in Türkiye. These ended with a clear message of dissatisfaction to the ruling party and the president. The ruling AKP lost almost all major cities such as Istanbul, Ankara, Izmir, etc. to the opposition candidates. It is astonishing that even on the Black Sea coast, the home of President Erdogan, some regions such as Giresun, but also Artvin and Ardahan, were lost to the opposition. Analysts mainly blame the economic crisis and high inflation in the country for the outcome of the election.



The question that arises from this is whether the outcome of the election will have an impact that will also be relevant for the hazelnut market. It would not be the first time that the President has exerted his influence on monetary policy decisions at the Turkish Central Bank. The final decision on what to do with the hazelnut stocks at the TMO is probably up to the President himself. The question is whether the situation will now be assessed "self-critically" as announced, or whether political actionism will follow. It should be noted that despite the message sent by the people, the ruling AKP still has a majority in parliament and the president, albeit weakened, is still firmly in the saddle. Hopes for change in the near future should therefore not be too high.

How will the exchange rate be affected?

Many institutions in Türkiye, were closed on Monday. It is therefore not yet clear whether and how the exchange rate will react to the outcome of the election. However, most analyses assume that the trend of recent weeks will continue. An increase in foreign investment in Türkiye is also expected in the medium term. The hope is that the crisis has now bottomed out and will at least be followed by a phase of stability. The coming months will show whether this hope is justified.

As far as the commodities market is concerned, there are still no known changes. Exporters paid interest last week, meaning that the short-term liquidity requirement is no longer a price-reducing factor, which is already reflected in a moderate rise in commodity prices. Demand from Europe remains low, partly due to the Easter holidays and the associated school holidays. However, demand from the Turkish domestic market also remains subdued.

Harvest Estimates - Frost Risk

It is noticeable that there are a lot of cautionary voices in the hazelnut market about the latest development (price correction due to the positive harvest estimate). Due to the positive harvest estimate last year, some sellers closed contracts relating to the new harvest at an early stage, which later turned out to be a major negative transaction. This opportunity exists again this year. As already mentioned, this first harvest estimate is merely an indication that no extreme event is to be expected in terms of harvest volume. It is not possible to make any further statements at this time, especially regarding the actual harvest volume. Although the risk of frost is currently low, it is still present. The effects of the warmer than average February and March on the vegetation are also not yet foreseeable and the spread of the marmorated stink bug is also an issue.

TMO Stocks - Political Factors

In addition to all these factors, it is the political factors that continue to cause uncertainty. There are currently contradictory voices in the market regarding how the TMO will deal with its stocks. While some are saying that there is political pressure to convert the stocks into liquidity after the end of Ramadan, others are talking about not releasing the quantity onto the market in order to keep supply tight. It should be noted that most of the stock is kernels from the 2022 harvest. Although the quality of this harvest was above average, the kernels are no longer suitable for every purpose. The market leader in particular will probably only be able to use them to a limited extent. Should the TMO actually decide not to sell the stocks and press them for oil, as has already been done in the past, this would have serious consequences for the market, depending on the size of the coming harvest.

Price Drop?

The market will continue to be monitored over the next two weeks. The market is unlikely to change much this week. The focus will be on the impact of the election on the exchange rate. On Tuesday, 9 April 2024, the Ramadan Feast begins with the subsequent public holidays. Traditionally, little will happen on these days, so we do not expect any further impetus until mid-April, especially as it will then be possible to say whether or not frost is still to be expected this year. What you should bear in mind, however, is that those who are still holding goods from the current harvest will continue to be very willing to speculate. Even if the risk of frost has passed and the forecasts are good, the alternative origins are now increasingly sold out and buyers will therefore tend towards Türrkiye again. We therefore do not anticipate a price drop in the near future.

Bullet Points

• The regional elections in Türkiye end with a lesson for the ruling AKP. The impact of the results on the hazelnut market is not yet foreseeable.
• Commodity prices rise slightly. This is due to lower supply following the interest payment at the end of the quarter. The export price lists are nevertheless slightly lower on average than in the previous week.
• Many voices in Türkiye are cautioning against an overly positive assessment of the coming harvest at the present time.
• Demand remains weak due to Ramadan and the public holidays in Europe.
• The Turkish lira weakened slightly against the euro over the course of the week.