Hazelnut Industry Insights - January 2024 Update

Executive Summary:

The hazelnut market has witnessed significant fluctuations as the season progresses into its latter half. A notable surplus in Turkish inventory, speculative price increases, and cautious purchasing behaviors mark the current landscape. With prices reaching a five-year peak and the Turkish Grain Board (TMO) holding substantial stocks, stakeholders are navigating a complex market environment.

Dynamics of Supply:

·      Stockpile Patterns: The current season breaks from traditional trends, showcasing substantial inventories in Turkey, with vendors holding out for increased profits.

·      Price Fluctuations: Prices initially rose due to expectations of a reduced harvest, stabilizing at 95 TL/kg ($6.50/kg) and later climbing to $7.50/kg in January, the highest in five years.

·      Control of Strategic Stocks: With the TMO holding around 120,000 metric tons, its actions are expected to be a major factor in shaping market trends ahead.

Observations on Market Activity:

·      Purchasing Approaches: With prices on the rise, buyers are proceeding with caution, focusing on short-term needs which adds to the market's tightness.

·      Export Figures: There's been a nearly 10% drop in Turkish hazelnut exports year-over-year, totaling 138,000 metric tons by January.

·      Future Price Predictions: Anticipated adjustments in speculative price increases may occur, driven by major purchasers finalizing significant buys and forthcoming crop reports.

Factors Affecting Market Mood

Positive Outlook:

·      Holding for Higher Returns: Continued retention of stocks by farmers and traders in hopes of price increases.

·      Steady European Demand: Ongoing requirement in Europe for immediate supplies.

·      Inflation as a Motivator: The role of hazelnuts as a financial safeguard amidst Turkey's inflation.

Negative Perspectives:

·      Concerns Over Price Surge: A preference for buying in smaller amounts due to perceived overpricing.

·      Potential Stock Release by TMO: The expected impact of the TMO releasing its substantial hazelnut reserves.

·      Effect of High Local Interest Rates: Diminished motivation for maintaining large stockpiles due to elevated interest rates.

Looking Forward:

The hazelnut market's trajectory is closely tied to the interplay between speculative pricing, strategic stock management, and external economic factors. The anticipation surrounding the 2024 crop's outlook, particularly with concerns over agricultural pests and weather conditions, will further shape market dynamics.