There was a slight increase in activity in the Turkish Hazelnut Market last week. On the one hand, there were again some inquiries regarding cover in the fourth quarter. On the other hand, exporters are also positioning themselves for the new harvest. The heterogeneity of the market remains a characteristic feature. There are still major unknown factors that leave room for speculation and lead to different assumptions about the future.

These are essentially the following factors:

1. Harvest volume

Since the first forecast published at INC, statements on volume and quality have fluctuated. After initially downplaying the quantity and issuing warnings about quality, forecasts were then revised upwards. Reports indicated that damage from the marmorated stink bug was not as severe as assumed.

Now, a few weeks before the start of the harvest, the warning voices are on the rise again. There are also reports of downward corrections to quantities from government agencies and the quality parameters are being discussed in particular. This harvest is again said to contain a large proportion of empty kernels and many kernels are already damaged (mold / insect bites). The investigations have not yet been completed, but a certain skepticism has already taken hold of the market. Jumping the forecast is counterproductive in any case, as market confidence in the publication of the figures is already low. Clarity and reliability would be desirable.

2. TMO purchase price

It is still completely unclear what price the TMO will quote. As the TMO is not an economic entity and therefore does not act rationally/economically, it is very difficult to make a forecast. In recent years, the level of the purchase bid has been linked to the goal of price stability. The main aim was to prevent the price from falling.

The level of the bid was therefore based on an equivalent of around USD 3/kg. Now the situation is different. A bid at this level would lead to a fall in prices, which the farmers would hardly accept. They have a desired price of 150 TRY/kg (the market price today is around 112 TRY/kg), which seems very unrealistic from today's perspective. The TMO would therefore not actually have to give a price in the coming season, but there is an agreement with the market leader that the latter may not buy below the TMO's price, so it is assumed that a purchase bid will be made. It is also questionable what will happen to the stock from the 2022 harvest.

The quality is now likely to be such that it can only be used for certain products. Assuming a certain economic interest on the part of the political departments, the TMO is likely to be under a certain amount of pressure to bring the old harvest onto the market and not add any further quantities. How this can be achieved is currently questionable. Recently, scenarios were considered realistic according to that the purchase bid will be between 120 - 130 TRY/kg and the free market will settle at 110 - 120 TRY/kg, which roughly corresponds to the current level. However, the TMO is always ready for a surprise. Depending on the development of the exchange rate, there is still room for improvement.

3. Farmers' behavior at harvest

What must not be forgotten is the attitude of the farmers. If they are not satisfied with the price, they will withhold the goods. This has already happened several times in the past, with negative consequences for prices. If you consider the increased costs for harvest workers, living expenses, financing, etc. and the fact that politicians have so far supported their will, this factor should not be underestimated.

As mentioned above, farmers' expectations and the expectations of the market are currently still very different. However, it must be said that there are currently no elections and politicians do not have to give any gifts. However, it should also be noted that most exporters are starting the new season with very low stocks compared to the previous year and that most buyers are also rather cautious in terms of cover. The market leader in particular has little buffer stock. This should definitely be taken into account.

Apart from the uncertainty mentioned above, the market has actually shown signs of easing throughout the last few weeks. Most of the transactions in recent weeks have been concluded on falling prices, both for deliveries from the current and the coming harvest. Buyers are therefore still motivated to wait as long as possible before buying. To put this into perspective, however, it must also be said that some of the price corrections are exchange rate-related and therefore distort the picture somewhat. It should also be added that many buyers are pinning their hopes on relief from other sources in the coming season.

Bullet points

• Commodity prices remain at the previous week's level.
• There is hardly any demand for prompt delivery, the focus is now on the fourth quarter.
• The price lists for the 2024 harvest are very heterogeneous, as future expectations vary due to the major unknown factors (harvest volume, TMO, farmers' behavior).
• The last count before the harvest is currently underway. There appear to be regional quality problems and quantity corrections. However, the counts have not yet been completed.
• There was another slight downward movement in the exchange rate. This is the main reason for the correction in the price lists.