In Turkish Hazelnut Market, after various organisations carried out the final counts in the plantations on the Black Sea coast over the last two weeks, the results were published this week. Although these differ (as usual), they all show a more positive picture of the harvest than recently assumed.

Harvest forecasts

The Agricultural Union expects a harvest of approx. 710,000 mt and the Export Union a harvest of approx. 750,000 mt. The forecasts of individual exporters range from 700,000 to even 800,000 mt. There are also significant differences in the assessment of the quality of the harvest. Some speak of a very good harvest, while others take a more differentiated view. It is expected that there will be many small kernels in the Akcakoca region due to the heat. In the eastern Black Sea region, a normal kernel size distribution is expected. Opinions also differ greatly regarding the damage caused by the marmorated stink bug. While the Akcakoca region has hardly been affected so far, there are voices in the eastern Black Sea region that say that regional damage of 10-15% is to be expected. This figure is so high because the damage will only be seen at harvest or after cracking. This correction factor is already included in the pessimistic harvest estimates.

TMO's price

However, the publication of the harvest forecasts is not the issue that most concerns local market participants. Rather, it is once again the news that the market leader is not allowed to undercut the TMO's price if it buys kernels in shell itself. The price that the TMO will set is therefore the main topic of discussion.

Huge tension

There is a huge tension here between the expectations of the exporters or buyers and the producers. While the farmers are hoping for prices between 150 - 160 TRY/kg (also due to the adjustment of labour costs for contract workers), the exporters are expecting a price between 115 - 135 TRY/kg. The crackers' great hope is that the price on the free market will stabilise well below the TMO price so that they will be able to offer the market leader cracked kernels at attractive prices. Much will depend on how the season starts. If there are many kernels at the same time, there is hope for price pressure. If the harvest is delayed, as was the case last season, and farmers insist on higher prices, the small surpluses or stocks held by exporters could put them under pressure.

Many buyers are not aware that the market could turn again. Prices have been falling continuously in recent weeks and offers for the coming harvest are also signalling a decline. In addition, all other origins are also reporting positive harvests. Buyers are therefore continuing to adopt a wait-and-see approach and are living hand-to-mouth.

Heterogeneity of offers

What has increased significantly in the last two weeks is the heterogeneity of offers, especially with regard to the coming harvest. We are seeing differences of up to 1 EUR/kg between the individual suppliers. This can be explained by different assumptions about the development of commodity prices, but also by different exchange rate scenarios. It is therefore worth comparing more than before.

With regard to the stage of vegetation, it can be assumed that the harvest will start about a week earlier than usual. We assume that picking will begin in the first week of August in areas close to the beach.

Overall, the season is drawing to a close. Many crackers have now finished the season. Some exporters have also closed their factories for cleaning and maintenance work. Many employees are on holiday. As a result, the current supply of raw materials is also limited. In combination with good demand from Europe and the domestic market (mainly for the 2024 harvest), commodity prices have stabilised or risen slightly.

We do not expect the situation to change significantly in the coming week. The monetary policy committee of the Turkish central bank will meet on Tuesday. It is assumed that the key interest rate will remain unchanged. However, if there are any changes, this could have an impact on exchange rates, which in turn could lead to corrections in the price lists.

Bullet points

• Raw material prices are rising again slightly. Supply is limited as many factories have finished the season and have now ceased operations until the start of the season.
• Offensive offers stimulate demand / desire to buy in Europe. The last few weeks have been characterised by a large number of deals, although mostly only for 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' behaviour).
• The harvest forecasts are more positive than recently expected. Most estimates now range between 710.000 - 750.000 mt.
• The exchange rate moved more or less sideways this week. Next week, the Turkish central bank will meet again to discuss the key interest rate.