A trend reversal is emerging in the Turkish hazelnut market, the outcome of which is still uncertain. In Europe, only the precursors of this can be felt and the falling price levels of recent weeks give the impression of a situation that may prove to be deceptive. However, the mass delays in delivery and the first qualitative deviations point to what will be the subject of widespread discussion in the coming weeks.

A two-tier market

As already indicated several times, we will see a two-tier market this season. On the one hand, there will be a market for processed goods due to the large number of small kernels, which will be at an attractive level. On the other hand, we will see a market for natural kernels that cannot yet be categorised as things stand today. What is now becoming apparent as the harvest progresses is that the damage caused by the marmorated stink bug is many times greater than originally assumed. It looks as if, with the exception of a few batches, it will not be possible to fulfil the agreed quality standards. Some crackers have already stopped their purchasing activities as the batches delivered so far have been the subject of complaints and there is no way of influencing the quality. The reaction of the market leader shows that this is not a local phenomenon. This week, it published its purchase offer for natural kernels of size 11-13 mm at 235 TRY/kg. The novelty here is that the market leader has adjusted the quality parameters downwards. Previously, the quality was fixed. We see this as a warning signal and conclude that the market leader has already adapted to reality based on its market knowledge and is now trying to cover its demand quickly.

Quality Problems: Tumour defects

The main qualitative deviation is the cores with hidden tumour defects in Turkish hazelnut market. These cannot be detected using current technology, as the defects are located on the inside. Even the defects adjacent to the edge are difficult to detect in natural cores. The high number of these defects leads to deviations from the values of the Turkish standard TS3075 or most of the specified values and thus to a complaint.

Are Alternative Origins a solution?

The question that now arises is whether compliant replacements can be supplied and the answer that emerges is probably no! This has enormous implications, as more than 60% of all cores come from Türkiye and can therefore no longer be considered a minor issue. Although there are alternatives, these cannot compensate for the quantity. Although there are origins such as Azerbaijan, Italy, Spain and the USA that can currently supply higher quality, the Italian origin in particular is itself struggling with reduced yields and quality problems. Azerbaijan is already aware of the situation and has adjusted its prices significantly. It is possible to obtain top quality here, but there are compromises to be made in terms of foreign body management and certifications. We have heard from the USA that the market leader is already very active here.

Uncertain Market Under Dark Clouds

However, we only see the real dark clouds for next year. As things currently stand, Turkish hazelnut market will not be able to solve the problem of insect pests in the short term, unless we experience a period of heavy frost next year, which would then cause further problems in terms of price development. We will therefore now have to discuss how to deal with the situation. With the exception of the market leader, the market is still in its infancy. It should also be borne in mind that the spoilage of the kernels continues as the season progresses. This may mean that the kernels can then be selected, but it may also lead to an increasing general deterioration in quality. It will therefore probably require continuous adjustment of the quality parameters throughout the season. The question is how this will affect prices. On the one hand, there will be massive discounts for farmers and raw material traders, which will presumably be offset by higher raw material prices. Crackers will also have to pass on the increased costs for selection. Whether and how this will affect the prices for semi-finished products is currently still uncertain, as the rejects can probably only be used to a very limited extent due to sensory deviations and the original calculation models will therefore no longer be effective.

It should not be forgotten that the TMO will probably only start to release stocks from the 2022 harvest onto the market from January, once purchasing activities have been finalised. Although these are better in terms of tumorous kernels, they are probably no longer suitable for every application due to their age. Much will depend on what compromises the market is willing to make and how quickly technical solutions will be available. In any case, we expect the spring of 2025 to be very turbulent. It has been more than 10 years since the last frost. Demand is likely to be at least equal to the previous year's volume with reduced supply overall. In addition, there will be no reliable quantity and quality forecast for the 2025 harvest. There is therefore more uncertainty than in the previous year, although this mainly affects the market for natural kernels, which is the ‘lead currency’ and can therefore also influence the market for semi-finished products.

Challenges Ahead: Pesticide Concerns

The coming weeks will therefore be very interesting, as they will form the basis for the further course of this and the coming season. We will also see what side effects there are already. For example, we are hearing of positive pesticide and insecticide findings in organic produce. The reason for this is presumably improper application or inputs from conventional plantations. If this is not an isolated case, this could lead to an additional aggravation of the situation for the organic market and, with a view to a comprehensive and intensive control of insect pests in the coming season, the question arises as to whether organic produce can still be obtained from the source at all. For this reason, many voices are currently advocating the widespread use of beneficial insects. The question is whether this is feasible in terms of quantity and time.

Reasons for Price Decline

Apart from the above-mentioned development, it can be noted that prices for both raw and processed goods fell over the course of the week. On the one hand, this is due to the good inflow on the market and the reluctance of some crackers to buy. On the other hand, the market leader is still very active. There was hardly any change in the exchange rate. The interest rate hike in the USA had little overall impact on the exchange rate, as the Turkish central bank left its key interest rate unchanged.

In terms of demand, there continues to be a high level of interest. Spot lots are currently in demand, especially in Europe, as almost all producers are behind schedule with their shipments. We expect that it will take at least another four weeks before the backlog is cleared.

Key Points

• Market leader publishes its purchase offer for natural kernels (235 TRY/kg for natural 11-13 mm), but for the first time with downwardly adjusted quality parameters, which puts the market on alert.
• A major quality problem is emerging in Turkish hazelnut market. It is likely that a large proportion of the natural kernels will not meet the usual quality standards.
• Alternative origins are already adjusting their prices significantly in order to profit from the quality advantage.
• Expectation of a two-tier market development. On the one hand, expensive natural and fully blanched kernels of good quality and favourable small-scale processed goods.
• Exporters' price lists continue to be very heterogeneous, with some sellers withdrawing from the market.
• The Turkish lira is stable this week

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