This week we have seen increased activity in the hazelnut market both on the buyers' and sellers' side. On the buyer side, it is mainly retailers scanning the market with the first inquiries but still hesitating due to the feedback. However, sellers have also become increasingly active and are now trying to fill their order books, especially for the third quarter. The interesting thing is that the willingness to take risks on falling prices has now increased significantly, although this is heavily dependent on the product being traded. The main reason for this is that the risk of frost can now be more or less ruled out and the harvest forecast tends to be positive.

Overall, there are still two sides among sellers. Some are urging a certain degree of caution, as many factors are still unclear. The others are now prepared to take certain risks and are now offering aggressively. In fact, there are currently factors that speak in favor of a continued high price level, but on the other hand, we also see justified reasons for prices to fall.

What are the reasons for a consistently high price level?

• The alternative origins such as Georgia, Azerbaijan and the USA will probably be sold out by the end of April. For the remaining four months of the season, only the Turkish origin will then be available. The Turkish sellers are aware of this.
• The market leader still has a quantity of 30,000 - 50,000 mt to cover. In terms of volume, this should not be a problem, but it is questionable whether the required qualities are still available and whether this will drive up the price.
• The TMO is likely to sell its stocks this season. In line with past experience, several tenders are expected at intervals of around 4 weeks. TMO's crops are from the 2022 harvest, so if they are no longer sold this season, selling them in the future is likely to cause certain quality problems. The crop can also no longer be used for all purposes. It is therefore likely that the price for natural kernels of good quality will remain high, although certain preparations may well become cheaper. It is expected that the sales price of the TMO will roughly correspond to the current market price.
• The exchange rate is an unpredictable factor. The Turkish central bank has recently made it clear that it will continue to pursue a tight monetary policy and keep the Turkish lira stable. Looking at the past, it was mainly the exchange rate that gave European buyers attractive prices. At the moment, the leadership of the Turkish central bank seems to be forced to enjoy the confidence of the president, so no major leaps are to be expected in the near future, especially as the major events, such as the elections last weekend, are now behind us.
• Financing costs continue to be a major challenge for exporters. There are rumors that some exporters' financing costs are around 10% of their turnover. We cannot verify this independently. However, it is important to know that this factor has become a not insignificant factor in price calculations.
• The effects of the unusually warm weather on vegetation cannot yet be predicted.
• The mass occurrence of the marmorated stink bug can lead to quality problems (damage to the kernels, but also pesticide residues if the control measures are not applied properly à problematic for organically grown kernels)
• In the coming season, the market leader will start buying raw materials directly from farmers in the western growing region and no longer only through its existing partners. This could lead to a bidding war between the existing partners (to secure their position) and the market leader for the raw produce.
• In order to satisfy the farmers, the TMO would have to offer a significantly higher price (converted into US dollars (currently mostly around USD 3/kg)) than before. This would mean a significant upward adjustment of the lower limit. There is still a lot of uncertainty here, especially as a bid in the current region could also have a price-reducing or neutral effect.

What are the reasons for prices to fall?

• The risk of a major night frost can now be virtually ruled out due to the current weather forecasts.
• Based on current knowledge, no extreme amounts (positive or negative) are expected in the coming harvest. More precise statements can only be made once the fruit set has been counted at the beginning of May.
• The short-term purchasing behavior of buyers is not advantageous for exporters' planning. In particular, the high competitive pressure is now causing sellers to become bolder in their attempts to fill their books for the third quarter and beyond. The tendency to speculate is increasing significantly. The pressure and expectations of European buyers on exporters is also quite high. After the 2023/2024 season, which was quite negative for most, many are expecting some kind of compensation.
• Now that the frost risk has ended, farmers who are still holding positions may sell their crops. As the exact quantity of goods held back is not clear, this may cause prices to fall in the short term if demand is low.
• If the TMO were to act as a seller, this would lead to some easing in the market, even at high prices, especially with regard to the harvest surplus for the coming season. It can also be expected that after the TMO's lots have been harvested, there will be a certain amount of lower quality lots that will then be sold at a certain discount and then find their way back into the production of certain processed products, which in turn should lead to a downward price correction.
• If you look at the chart of the Turkish lira in relation to the US dollar or the euro, it has repeatedly fallen sharply, but also constantly and slightly. For this reason, there are also sellers who factor this effect into their calculations and therefore act more "courageously" than others.
• Obtaining export credit is one of the most important things for most exporters in order to keep their business running and make purchases of raw materials. Therefore, we also expect that some exporters will make certain sales decisions even if this results in an operating loss but allows them to maintain their credit line.

Very little will happen in Türkiye this week. Although some companies will still be working on Monday, all factories will be closed until the end of the week from Tuesday at the latest with the start of fast-breaking (end of the fasting month of Ramadan). Response times to any inquiries are likely to be correspondingly slow. It can therefore be assumed that the export price lists will hardly change next week.

Bullet Points

• Commodity prices fall slightly once again as some sellers wanted to sell their positions before the Ramadan holidays.
• The risk of frost can now be virtually ruled out for this season.
• There are now significantly more sellers speculating on a downward price correction in the coming months.
• Both cautious and optimistic sellers were very active this week.
• There will probably be little activity in Türkiye this week due to the holidays at the end of Ramadan.
• The Turkish lira has remained almost stable week-on-week. The impact of the local elections is therefore minimal.