Harvest estimates were once again made on the Black Sea coast this week for the Turkish hazelnut market. The Agricultural Union published its harvest forecast, but some exporters also updated their estimates once again. While the Turkish Export Union published a figure of 785,000 mt at the INC, the Agricultural Union's estimate is significantly lower at 685,000 mt. These figures regularly differ from one another, as the counting and extrapolation methods vary. However, it must be said that last year, the Agricultural Union's forecast was much closer to the actual figure than that of the exporters.

Stink bug?

It should also be noted that this forecast does not include any damage caused by the marmorated stink bug. Most in the market are therefore assuming that the coming harvest will be roughly the same as last year's harvest of around 650,000 mt. If this proves to be the case, the coming season is likely to be exciting, despite the positive global forecast. It should be borne in mind that almost all market participants are pursuing a strategy of short-term cover. There are few buffer stocks. The largest buffer stock is in the hands of the TMO and if it only has a limited supply until the end of the harvest, the market will start the new season with a significantly lower “available” surplus than before.

Turbulent market

The start of the season in the western growing region should be particularly exciting. In contrast to the eastern region, the forecasts for this region are very good. However, we expect a turbulent market in this region at the start of the season.

The market leader will have its new cracking plant in operation for the first time at the start of the season. After it was unable to cover the majority of its annual volume within a short period of time at the beginning of this season, as is usual, and this gap meant that it was “vulnerable to blackmail”, we assume that it will not make the same mistake again this year. However, it can be assumed that existing local producers will also compete for the goods. Therefore, apart from the low stocks, we assume that a large wave of demand will reach the market at the start of the new season. A certain buffer should therefore not do any harm.

TMO's strategy

What also seems to be becoming increasingly clear is that TMO will not change its strategy. After hardly being able to sell any volumes in the first tender, it nevertheless responded with an upward adjustment for further tenders.

Inflation at full throttle

It should also be noted that inflation in Türkiye is on the rise again at the moment and was back up to almost 70% in April compared to the same month last year. This was expected as a result of the minimum wage increase, which is why the Turkish central bank did not react this week by adjusting the key interest rate. Inflation is expected to peak at 75-80% in the coming months. After that, a decline is expected. For the hazelnut market, however, this also means that the TMO price for the coming season will probably be higher than the current market price. Today, the price on the free market is around TRY 117/kg for hazelnut kernels in shell from the 2023 harvest. The TMO already wants TRY 125/kg for goods from the 2022 harvest. Therefore, a price of 130 - 135 TRY/kg is currently considered quite realistic.

Although these scenarios are being discussed in public, we can see that the market continues to act extremely differently. For example, there are a few suppliers who offer very favorable prices for prompt delivery, but also offer prices for later dates that are already below the current market price. In contrast, the majority of exporters have so far been rather cautious.

In terms of demand, we are seeing a certain amount of buying interest. The price level has been generally accepted and is finding a certain level of acceptance. Nevertheless, we continue to feel cautious about entering into long-term commitments at this level. In general, due to the heterogeneity of prices, comparing is once again one of the most rewarding activities.

Bullet points

• The majority of market participants assume that the coming harvest will only be roughly the same size as the current harvest, which is why optimism about falling prices is waning.
• The behavior of the market leader at the start of the season is eagerly awaited. It is starting with little surplus and a new strategy.
• TMO's actions do not indicate a change in strategy.
• Inflation data ensures that the state-guaranteed minimum price will probably be higher than the current market price.
• This week shows extreme differences in the export price lists. It is worth comparing.
• There were also hardly any changes in the exchange rate.