After last week's surprising decline in commodity prices in hazelnut market, we saw prices rise again significantly towards the weekend after a quiet start to this trading week. While last week it was mainly the trading of players with a long position that was responsible for the price development, this week it was again the reaction to the TMO tender.

Why TMO's sales remained low?

In total, the TMO only sold around 1,000 mt out of 27,000 mt from its first tender. The reason given was the rejection of the quality of the 2022 harvest. According to the general opinion, this can only be used to a limited extent for the production of smaller preparations and hazelnut paste. However, it should not be forgotten that at this time the price on the free market was significantly lower than the TMO price. Many bidders presumably only rejected the TMO on the grounds of quality in order to be able to counter-bid more favourably on the free market. However, the supply on the market is still limited, it is only possible to buy smaller quantities at a time, which is why the price on the free market rose again significantly in the second half of the week as a result of the mass rejections and was quoted at 124 TRY/kg again at the end of the week (previous week: 118 TRY/kg). The TMO has once again provided buyers with samples from other positions, which the bidders are now examining. In the course of the following week we should then know whether this first round of tenders was a flop for the TMO or a success with initial difficulties.

Tender by market leader?

There is currently no news from the market leader. There is speculation as to whether it will enter the market again with a tender or whether the demand for this season is now covered, as proclaimed. As a large proportion of exports this year have been made via co-operating exporters, this point remains difficult to assess.

Speculative situation

In terms of demand on the buyer side, the picture is mixed. While most large buyers have now covered their needs for the third quarter, smaller and medium-sized buyers are still pursuing a strategy of buying only the bare essentials. In order to be able to make further decisions, buyers are now trying to assess the market by making enquiries for later dates. The picture here remains mixed due to the speculative situation. Therefore, this does not lead to any clarity.

Harvest estimate

At the weekend, the Export Union will discuss the forecast for the 2023/2024 harvest estimate to be published at the INC. In contrast to previous years, however, it is not only Türkiye's estimate that is relevant for the further market development, but also the sum of the alternative origins. We therefore assume that there will be little activity on the part of buyers in the coming week, as most will be waiting for information from the INC.

In terms of the currency markets, there was little change this week. In the US, there was no change in the key interest rate due to higher than expected inflation. As a result, there was little movement in exchange rates.

As already mentioned, the coming week is likely to be another one with little activity. However, we expect an increase in activity after the publication of the INC crop estimate.

Bullet points

• Commodity prices are rising again significantly after some sellers withdrew again. Supply on the free market remains limited.
• The TMO has so far been able to sell less than 1,000 mt of the 27,000 mt advertised. The reason given is rejection due to quality. (at this time, however, the price on the free market was also below the price of the tender)
• The market leader has still not become active.
• Insignificant changes in the exchange rate. Current trend is stability.
• The market is waiting for the publication of the harvest estimate next week at the INC.