Market Report: Turkish Hazelnut Market – February 2025

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Market Overview

The Turkish hazelnut market remains highly dynamic in early February 2025. Recent developments, particularly the unexpected sales announcement from the Turkish Grain Board (TMO), have temporarily pressured raw material prices. However, this effect appears to be short-lived as farmers react by withholding their remaining stocks, hoping for higher prices.

The market leader continues to operate cautiously, making purchases through alternative exporters rather than direct large-scale acquisitions. Prices for natural kernels have slightly declined, while smaller calibers and hazelnut paste have seen a more pronounced drop.

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Price Trends

Current prices for Turkish hazelnut kernels (11–13 mm, g/n) DDP Central Europe:

• Organic raw kernels: €9.00/kg
• Conventional raw kernels: €8.11/kg
• Organic roasted kernels: €9.94/kg
• Conventional roasted kernels: €7.48/kg
• Small-caliber kernels (2-4 mm): €6.91/kg
• Hazelnut paste: €6.24/kg

Market changes compared to previous periods:

• 1 Week: -1.33%
• 1 Quarter: +7.87%
• 1 Half-Year: +15.86%
• 1 Year: +6.90%
• 3 Years: +35.47%
• 5 Years: +15.50%
• 10 Years: -65.86%

The FX market has remained relatively stable this week, with no significant movements affecting the TRY/EUR exchange rate.

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Current Market Situation

1. Impact of TMO Sales Announcement:
   • TMO’s recent sales triggered a temporary price decline as additional supply entered the market.
   • Despite this, farmers reacted negatively to the TMO’s move and are now withholding their stocks, aiming for higher prices.
   • Exporters have inspected the offered TMO batches, and interestingly, all 2024 crop stocks were sold despite prices being over 7% higher than the current free-market rate.
2. Export Market & Demand:
   • Export demand remains cautious, with buyers still evaluating the market.
   • The market leader has not yet adjusted its purchasing strategy but is believed to be fulfilling orders through other exporters.
3. Quality Concerns:
   • The 2024 harvest has shown a significant rejection rate due to quality issues.
   • This has led to further differentiation in pricing between high-quality whole kernels and processed products.
4. Financial Developments & Exchange Rates:
   • The Turkish Central Bank has maintained its policy stance, leading to stable currency fluctuations this week.
   • Most price adjustments seen in export lists reflect corrections from the previous week rather than new developments.

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Bullish Factors

• Market Leader’s Position:
  • The market leader is behind its usual purchasing schedule and may adjust its bid, which could support prices.
  • Due to high rejection rates, the actual required purchase volume is likely to be larger than in previous years.
• TMO Price Floor Influence:
  • The TMO’s first sale has set a price floor of 145 TRY/kg for in-shell hazelnuts, with some exporters already buying at this level.
• Macroeconomic Factors:
  • The Turkish Central Bank aims to stabilize the Turkish Lira while keeping inflation in check.
  • Even though inflation is declining, it remains above the Lira’s devaluation rate, likely necessitating price adjustments in the raw material market.
  • The strength of the US Dollar may impact export pricing trends.
• Potential Shortage of High-Quality Kernels:
  • The remaining stock is primarily held by farmers who are unwilling to sell at current levels, leading to potential short-term scarcity.
  • The market is expected to become increasingly segmented between high-quality whole kernels and lower-priced processed products.
• Limited Alternative Origins:
  • By Q1 2025, alternative supply sources are expected to be depleted, increasing reliance on Turkish hazelnuts.
• Rising Production Costs:
  • Minimum wages, sorting costs, and energy expenses continue to climb, adding upward pressure to prices.

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Bearish Factors

• Hidden Purchases by the Market Leader:
  • The market leader may already be making undisclosed acquisitions, reducing expected demand.
• High Interest Rates & Financing Costs:
  • The high cost of financing makes speculative stockholding unattractive.
  • Despite this, suppliers are still holding onto stocks, though purchases are being made through different channels.
• Currency Risks & Economic Trends:
  • If Turkey’s interest rate policy shifts, the Lira could weaken, impacting pricing strategies.
• Sufficient Physical Supply:
  • While farmers are holding back, supply is still available via alternative channels, though not necessarily through the TMO.
• High Price Sensitivity Among Buyers:
  • Prices have already reached levels where certain buyers, particularly in China, are hesitant to make further purchases.
  • However, historical price trends suggest there is still some buyer acceptance.
• Uncertainty in the Chocolate Industry:
  • Due to unclear sales forecasts, many chocolate manufacturers are making smaller purchases than usual.
• Competitive Pressure Among Exporters:
  • Exporters face increasing pressure, which could lead to price reductions in some market segments.
• TMO’s Sales May Lead to Alternative Supply:
  • Farmers withholding stocks could face competition from TMO sales.
  • Lower-quality kernels and surplus inventory from previous harvests could push down processed product prices.
• Rejects Returning to the Market:
  • A large volume of rejected kernels from the market leader could re-enter circulation, increasing supply.

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Outlook

The Turkish hazelnut market is currently in a transitional phase. Short-term volatility is expected as market participants react to the TMO’s influence and farmers continue to withhold supply. The key factors shaping the market in the coming months include:

• Frost Risk & Weather Conditions: Any frost damage could significantly impact the outlook for the next harvest.
• TMO’s Future Auctions: Further TMO sales will set the direction for price trends.
• Exchange Rate Movements & Economic Policy: Any shifts in Turkey’s monetary policy could affect export competitiveness.
• Market Segmentation: Increasing price differentiation between high-quality whole kernels and lower-quality processed products.

In conclusion, while short-term price fluctuations are likely, the medium-term outlook remains bullish due to rising production costs, quality concerns, and supply constraints. The coming months will be crucial in determining whether prices stabilize or continue to rise further.

Hazelnuts 11-13

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