Continuation of Price Trends Amid High Demand

The trend of recent weeks in Turkish Hazelnut Market continued this trading week, to the dismay of many buyers. The reason for the rise in commodity prices is not due to speculation or restraint, but in fact to current demand. The driving force is the market leader, which is trying to fill its demand as quickly as possible and is therefore very active as a buyer and can also adjust its bids upwards accordingly.

Shift in Buyer Strategies

In addition to the market leader, other exporters are also very active in the market and domestic demand is also generally good. Industry experts assume that the market leader has currently covered around 40% of its annual demand, which means that it will continue to be active in the coming weeks and prices are therefore unlikely to fall. The changed situation has also led to a rethink among many buyers. While most of them were previously more short-term oriented, some are now starting to focus their coverage on the medium to long term again. As a result, there is now more demand on the hazelnut market, which is also driving up prices. After starting the season below last year's level, we are now above last year's level.

Uncertain Market Dynamics Persist as TMO's Role Becomes Pivotal in 2024-2025

In discussions with many hazelnut market participants, it is clear that most of them do not expect the situation to ease until at least the second quarter of 2025. The coming weeks will be determined solely by demand from the market leader. TMO will then return to the stage. Although it is not relevant as a buyer1 , the sales bid will set a new direction. We assume that the TMO will act as a buyer until the end of November. It will hardly receive any more goods, as prices on the free market have now also reached this level and selling on the free market is easier for farmers or those who still have goods are betting on prices rising further and are therefore currently holding back their goods.

Most expect the TMO to act as a seller from January and that the level for the 2024 harvest will be at least TRY 140/kg. As this will again have an impact on the market leader's bid (tied to the TMO price), the market leader naturally has an interest in completing its purchases before then if possible. However, it is also quite possible that the TMO will set the price even higher in order to compensate for the high inflation in the country. This is now falling. However, it was still 49.38% in September compared to the previous year.

Influence of Currency and Inflation on Pricing

In recent years, with the exception of last year, the Turkish lira was regularly devalued and export prices therefore remained moderate. This compensatory effect is now disappearing due to the efforts of the Turkish central bank. This month, too, it left the key interest rate at 50% p.a. and has declared the fight against inflation to be its priority. As a result, there are currently hardly any sellers who are betting on falling prices for long-term contracts, which was often the case in the past. As a result, offers for long-term contracts are currently subject to a significant premium. This is justified by financing costs, uncertainty regarding the development of quality ((inner) tumorous kernels), rising processing costs (the minimum wage in Turkey is to be increased by at least 25% next year) and the additional costs for additional selections.

It is not yet clear whether the momentum will continue, but many exporters expect internally that we will exceed the limit of TRY 300/kg for natural kernels of the 11-13 mm calibration for the first time next year. The current price is around 255 TRY/kg.

However, the heterogeneity in the market is also characteristic at present. Although there are a few sellers who have built up long-term positions in advance, due to the different qualities of the kernels and the focus on the products, we are still seeing large differences in the exporters' price lists, although this mainly relates to processed goods. In the case of natural kernels, the suppliers are now all quite close together again.

In terms of quality issues, we are surprised that buyers have so far been happy with the goods supplied. Overall, exports are currently running at full speed. Many exporters are still behind schedule with their shipments, which is reflected in requests for deliveries at short notice. We assume that it will take another 4-5 weeks before things return to normal.

For buyers of organic produce, it should be noted that many sellers assume that quantities will be limited this year. This statement cannot be verified independently, but there is much to suggest that this is the case.

Key Points

• Strong demand and reduced supply lead to further price increases in the hazelnut market.
• Many buyers are surprised by the sharp rise in prices and are now beginning to adjust their purchasing strategy in anticipation of further price increases.
• The heterogeneity of price lists for natural kernels is now decreasing. However, there are still large differences in processed goods.
• The market seems to have come to terms with this year's quality.
• Offers for long-term contracts have resulted in large premiums, and hardly any sellers dare to bet on a falling market. Buyers and sellers are preparing for further price rises.
• The Turkish lira continues to trend sideways against the euro and the US dollar.

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