This week was different than expected for the hazelnut market. Although some things happened as anticipated, fortunately there were also unexpected events that had an impact on price levels. Following the launch of the TMO tender last week and the associated rise in commodity prices, many buyers have realised that there is now very little chance of prices falling. For this reason, there has been an increase in enquiries this week about covering the remaining quantities of this season. In principle, the season only has four months left, which is why the respective coverages are now taking place.

Intriguing Situation

It is interesting to note that, contrary to expectations, the market fell over the course of the week despite increased export demand. There are several reasons for this.

• For example, it was originally expected that the market leader would place a purchase offer for natural kernels on the market this week. However, this has not happened and it is assumed that it will not happen this season either, as the market leader will be commissioning its new cracking plant next month.
• As a result, it no longer makes sense for some of the market leader's suppliers to hold positions, so the decision was made to sell them. In addition to this group of crackers, who are mainly active in the Turkish domestic market, some large exporters acted as sellers of raw materials this week.

Increased supply

The sudden increase in supply caused prices on the free market to fall significantly. After the free market closed last week at around 127 TRY/kg, this week it was around 118 TRY/kg. From the outside, the trading looks somewhat contradictory, especially as the same exporters who are now acting as sellers on the market are also bidding for goods from the TMO's stocks. Overall, however, the trading is not unusual. A few years ago, it was common behavior for the largest exporter at the time to lead the market and exert a regulating influence on the price level with such actions. It is also possible that profits from long positions have now been realised as a result of the sales. The coming week will show whether this was a temporary phenomenon or whether it has slowed the price rise in the long term, which is probably in the interests of most exporters.

TMO Tender Uncertainty

It is interesting to note that there is still no information on the outcome of the TMO tender on the market. The interested parties have received samples of the lots they have bid on. However, as the price on the open market is now lower than the sale price of the TMO, things are likely to get exciting again. To put this into perspective, however, it must be said that although the price level on the open market is lower at the moment, the available supply is still limited. Anyone wishing to acquire large positions will only be able to do so to a limited extent, which is why we believe that the tender is likely to go ahead as announced. Most people also assume that the current level will mark the lower limit for the time being.

2024 Harvest on the Horizon

Market participants are currently still focusing on the 2023 harvest, but the 2024 harvest is now increasingly taking centre stage. On the seller side, little has changed compared to the previous week. The vast majority are currently still quite conservative with regard to sales of the 2024 harvest, although there are individual sellers who are on the market with speculative offers. We expect that the majority of sellers will only become aggressive towards the end of May.

Vegetation and bug problem

There is no significant news in terms of vegetation. This week has been exceptionally warm, but a return to normality is expected in the coming week. The population of the marmorated stink bug and the lack of a common strategy to combat it across the board remain a cause for concern. This is currently one of the factors influencing exporters' willingness to take risks.

There are also no major changes with regard to the foreign exchange market. At this week's meeting of the Monetary Policy Committee, the Turkish central bank decided to leave the key interest rate stable. We were unable to detect any impact on the exchange rate as a result.

Upcoming Events

The next date in the hazelnut calendar will be the publication of the harvest estimate at this year's INC. In addition to expectations for Turkey, the forecast for other origins, particularly Italy and the USA, will be the main talking point. An increasing switch to alternative origins is expected, especially for natural kernels. The focus is therefore slowly shifting.

Snow in Italy

At the beginning of the week, we received pictures from Italy of hazelnut plantations covered in snow. According to our information, this only affects a small region in Piedmont. There is no information yet about possible damage. However, this is likely to be insignificant in terms of overall volumes.

We are eagerly awaiting the coming week. The results of the TMO tender are likely to become known. We will also see how commodity prices continue to develop. The market leader has probably been able to cover half of its outstanding requirements in recent weeks, but there is still a quantity of approx. 20,000 - 25,000 mt outstanding.

Bullet points

• Significant increase in buying interest as buyers no longer expect any major changes for this season.
• The market leader continues to refrain from bidding for natural kernels
• Raw material prices are falling significantly due to individual sellers liquidating their positions.
• So far, there is no information on the outcome of the TMO's first tender
• The Turkish central bank leaves the key interest rate stable at 50% p.a. The impact on the foreign exchange market is imperceptible, but the Turkish lira is trending slightly weaker over the course of the week.