Nuts

Hazelnuts: chaos continues

December 6, 2021 11:11 AM, Der AUDITOR
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ORDU. Chaos continues in Turkey’s financial market. Not only did President Recep Tayyip Erdoğan appoint a new finance minister on Thursday but Fitch Ratings also revised the country’s outlook to negative. For traders it is simply impossible to determine which way the hazelnut market will turn. Much also depends on Ferrero, the TMO and demand.

Panic grips market

The Turkish lira is hitting new lows against the euro and US dollar. A staggering high inflation coupled with panic and unhelpful political decisions are adding fuel to fire. The government itself pegged inflation at 21% for November. Scientists, however, reckon that inflation may actually range at around 50%. People living in Turkey are confronted with sharp price rises and many are changing their cash into US dollar and gold, a clear indication that domestic confidence has been undermined. The lira has, in fact, depreciated by 40% against the euro in November and has lost around 40% in value since last year. The depreciation of the lira also prompted the finance minister to resign last week. President Erdogan has now appointed Lüfti Elvan, an ardent supporter, as new finance minister.

The central bank tried to stabilise the market by selling US dollars, which, however, failed. Concerns of embellished statistics and central bank independence, which has clearly been undermined by Erdoğan’s interventions in recent months, have prompted credit rating agencies such as Fitch to revise Turkey’s ratings to negative. Market confidence has certainly dwindled, and question is in how far the government will be able to restore it, especially since political tensions are on the rise. One step the government is considering is to raise the minimum wage. Analysts are, however, sceptical, if this will be enough.

Difficult situation for hazelnuts

The highly volatile and unpredictable Turkish lira also spells a high degree of uncertainty for the hazelnut market. Prices would normally be determined by the supplies held by the individual market players ranging from growers over traders to exporters and the TMO but the market is largely tied in with the performance of the lira, which renders it impossible to issue reliable forecasts.

Ferrero has, in addition, not responded to the recent upheavals in such a way the conclusion may drawn on intended purchases. The stocks the TMO has purchased are also a matter of speculation with estimates ranging at 80,000-100,000 mt. However, the state-run organisation should issue a selling price in spring, which may act as a guideline.

Good news, nevertheless, is that exports performed well in November. Turkey shipped nearly 115,000 mt overseas, which is up on the 80,000 mt exported in the same period last year. If this continues exports may climb to 320,000-330,000 mt this season. Although demand has certainly revived in recent weeks, suppliers are cautious regarding long-term contracts. The depreciation if the Turkish lira has prompted another rise in raw nut prices, which, however, only partly compensates for the recent loss in value. Export prices, therefore, range a bit lower.

Prices have in fact drifted further apart and it pays to compare. While some buyers are reckoning with further price cuts, others are concerned over the possibility that tougher measures may be introduced to contain the virus, which has reached worrying highs in parts of Europe. This may certainly restrict demand. The market should, however, settle towards the end of the year.

Hazelnuts, Turkey

Size

EUR/kg

Natural, 11-13 mm 

5.15

Diced, 2-4 mm 

5.80

Meal, 0-2 mm 

5.50

Hazelnut paste

4.90

DDP Central Europe

 

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