The current hazelnut season is now drawing to a close in Türkiye. There are only a few small requests for prompt deliveries. The focus is now clearly on the coming harvest. Most factories are currently closing for maintenance and cleaning work and many employees are on vacation.

Low stocks

The current harvest is almost sold out on the free market, which is why prices have not fallen despite the recent publication of positive harvest estimates. Characteristically, most exporters are starting the new season with very low stocks. Only the TMO will start the coming season with a surplus of around 75,000 mt from the 2022 harvest. Overall, the market is tending to fall, but we have recently seen that the downward outliers in natural kernels have decreased and an adjusted level now seems to be establishing itself. Many exporters expect the current level (110 - 115 TRY/kg for hazelnut kernels in shell) to be maintained at the start of the season.

Kernel Quality to Determine Market Dynamics

In contrast, the market for processed goods does not yet seem to have found its feet. Here, the kernel size range and the proportion of damaged kernels still play a major role. These factors are not yet known, but there is much to suggest that a large quantity of small kernels and low-quality kernels can be expected in the coming harvest, which should have a positive effect on the prices of smaller preparations. However, this not only has advantages for the market, but can also lead to feedback. The market leader has little interest in small cores. It has to return these to the market and this is particularly the case if it cracks itself, as planned. The core size distribution can therefore also have an influence on its purchasing behavior

A Week of Waiting

We expect little activity in the coming week. We expect that the first farmers will start picking the kernels in about a week's time and that the TMO will not publish a price until then. Therefore, the coming week is likely to be a week of waiting and expectations. It will be interesting to see how farmers position themselves and how accurate their expectations will be.

Large Crop Estimate Dampens Enthusiasm

The recent publication of the Export Union with a crop estimate of over 800,000 mt will definitely put a damper on their expectations. We expect that behavior will not become more concrete until around mid-August, when the kernels have dried and been removed from the leaves, allowing initial conclusions to be drawn about quality (insect damage), kernel size distribution and empty nuts. However, due to the larger quantity alone, we are assuming that we will see a greater influx into the market this season and therefore more dynamism than this season. This is mainly due to the fact that farmers have to pay their harvest workers the same and the minimum wage is twice as high as last year. A certain amount will therefore flow into the market.

There was still little movement in terms of the exchange rate. The Turkish central bank left the key interest rate unchanged and the trend remains sideways.

Bullet points

• Commodity prices remain stable due to the shortage of stocks at the end of the season in relation to positive harvest expectations.
• Many factories are now closing the season and shutting down operations until the start of the season.
• A picture for the start of the season now seems to be emerging for natural kernels. There are still uncertainties for processed goods.
• The market is waiting for the publication of the TMO price to become more active.
• There is still little movement in the exchange rate. The Turkish central bank continues to keep the key interest rate stable.