This week was a again a week of uncertainty for many Turkish hazelnut market participants. Following increasingly positive descriptions of the current harvest in recent weeks and growing optimism, sentiment deteriorated significantly at the beginning of the week. The reason for this was the delivery of the first kernels from the coastal regions. There were numerous reports of very poor quality, particularly from the Samsun and Ordu regions. For example, the “randiman” (the ratio of healthy kernels to hard shells) was only 26 - 40% (normal value = approx. 50%) at some receiving points. A very high number of kernels with defects was conspicuous. The reason for the defects is associated with the occurrence of the marmorated stink bug and the weather conditions.

                 

Various examples of cores with quality problems from the Samsun and Ordu regions

Crackers do not want to buy

The quality of the batches is so poor that most crackers do not want to accept these batches, as their machines and sorting systems are not designed to sort such a high proportion of defective cores in a single pass. Especially now in the upcoming peak season, hardly any company can afford to reduce sorting capacity to such an extent. As a result, it is currently difficult to find buyers for these lots. It is also noticeable that the proportion of cores with the 13-15 mm calibration was very low in the first batches. As a result, prices for larger cores also rose significantly at the beginning of the week.

After the disillusionment at the beginning of the week, there was a glimmer of hope at the end of the week. It seems that the kernels in the middle growing regions (over 300 m above sea level) are of significantly better quality. The first batches from these regions are expected to come onto the market next week, which should ease the situation somewhat. The quality in the Akcakoca region is also expected to be better.

How will the prices be?

The coming week should be a very interesting one. The inflow of raw materials into the market should now increase significantly. It will be interesting to see how prices develop on the free market. This week, prices settled at around 115 - 118 TRY/kg. This is a price at which many farmers are expressing dissatisfaction, so it will be interesting to see how the booking figures at the TMO delivery points develop. The market leader will not announce its purchase offer until the first of September. We therefore still have around two weeks before purchasing activity increases significantly. However, the decisive factor for the further price development will in any case be the quality from the middle and higher regions. The quality of the lower regions is so poor, at least in Samsun and Ordu, that it cannot be sold at TMO. It can therefore only be sold on the open market at a significant discount. This should ensure that small-caliber processed goods, especially hazelnut paste, become more attractive in terms of price.

Exchange rate

In terms of the exchange rate, we see the Turkish lira coming under slight pressure due to the slightly increasing strength of the euro. The Turkish central bank's monetary policy committee will hold its next regular meeting on Tuesday. It is expected that the key interest rate will remain unchanged. Although inflation fell slightly in July, it remains at 61.78% according to the official statistics authority.

Other origins

From the alternative origins of Georgia and Azerbaijan, we are hearing generally positive reports in terms of quality and quantity. We are seeing increased sales activity here. In contrast, we are hearing more crop estimate revisions and less sales activity from Italy, which could also be related to the vacations.

Bullet points

• Commodity prices on the free market fluctuated strongly this week, but fell slightly at the end of the week compared to the previous week.
• Raw material from the coastal regions (up to 300 m above sea level) of the large growing areas of Samsun and Ordu are showing major quality problems. However, produce from other regions and from higher altitudes appears to be of normal quality.
• Exporters' price lists remain very heterogeneous.
• Buyers have returned to an observing role. However, interest in information is very high.
• For the coming week, we expect more activity (volume flow) in the delivery of raw materials to local delivery points and thus more momentum in the market.
• The Turkish lira is trending slightly weaker, but the impact on the price lists is marginal.