After visiting several suppliers last week and listening to their opinions the general conclusion is that the new crop will be smaller compared to last years crop of 320.000 m/tons. The crop 2018 is estimated at 260.000 m/tons. From this crop it is estimated that 210.000 m/tons will be Sultanas. Due to the high prices of USA Thompsons a lot of farmers have decided to dry the fruit as Thompsons (expected 50.000 m/tons).
With a carry over of around 20.000 m/tons from last years crop the Sultana quantity available will be around 230.000 m/tons. Total export last year was around 280.000 m/tons so we will be short 50.000 m/tons. It is expected that because of this shortage buyers will also start looking again to other origins like China and Iran.
Furthermore the fruit from this years crop will be relatively big. The 2017 crop Std size was around 240 berries per 100 gram and for 2018 this is expected to be around 220 per 100 gram. So the premium for Medium will be at least USD 75.- to USD 100,- / mton. And for even smaller counts the advice is to cover as soon as possible as the fruit might not even be physically available at the end of the season.
Taris had announced their buying price for this season a few weeks ago at TLR 9,- per kg (record price!). Despite this high price, farmers have not brought much product to Taris. Farmers are still expecting higher prices and prefer to wait. One of the reasons that the farmers expect higher prices, is the high inflation right now in Turkey around 30%. The cost of living is expected to increase rapidly and this will really start to hurt the people of Turkey.
Furthermore the banks have limited the financial possibilities of their customers, which leads to a situation where exporters lack the liquidity to purchase raw materials from the farmers which demand cash payments. In any other year they would purchase more fruit with the short crop of this year.
Most packers are only willing and able to sell short term contract and ask their customers for shorter payment terms in order to get their business financed. This year they need their partners. Further concerns of our suppliers are the strongly increasing overhead costs of their production, the general economy and currency specifically. We heard that companies are already going bankrupt right now, but the press seems to only be spreading good news these days of plans that will support the economy of Turkey, but of which no one sees any evidence in daily life.
Concluding we could only advise everybody to cover themselves for the coming season if this was a market only driven by supply and demand. However it is not and we also can not foresee what will happen to the Turkish Lira, the general economy, the behavior of farmers and the possibilities of exporters. All these parameters can cause fluctuating price levels where one week can be very different from the other. Right now prices show firmer levels than last year which normally makes purchasers wait to step in, but especially for certain berry counts we can only advise to step in if you see that level which is workable for you. We feel the situation today has a bigger risk of a firmer market than the chance of a lower one.
If you have any specific request, we look forward hearing from you.
Next to the hand cracked walnuts we would like to remind you that we always have on stock (both conventional and organic) a wide assortment of walnuts from India, Eastern Europe, Chile and USA.
Last week we have visited our suppliers in the Black Sea area. The hazelnut market in Turkey has shown relative low price levels in the past few months. Of course also this market has been strongly influenced by the uncertain Turkish economic situation and fluctuating Turkish Lira.
The crop had been expected to be about 640.000 mton in shell, back in May/ June, but due to more than expected empty shells, the general expectation nowadays has been adjusted to 550.000 to 580.000 mton in shell. Further the TMO in Turkey has another 77.000 mton carry over in hand and still 7.000 mton was left with the farmers of the 2017 crop. That comes down to a total of about 660.000 in shells, being 330.000 mton of kernels. This year’s export was about 350.000 mton of kernels.
The market has a delicate balance at this moment. On one hand we have TMO, who normally supports market levels for the Turkish farmers, by setting a firm purchasing price and then buying a substantial volume from the crop. However this year TMO has no government funds to do so and they have not declared any price yet. Further they have 77.000 mton in shell which they have to sell to get some cash in hands. However if they put this onto the market now, it will make prices drop further. .
On the other hand we have Ferrero as strongest single buyer of Turkish hazelnuts and influencer, who prefers stable relative low market levels. Ferrero buys about 30% of the crop and their purchasing prices to the farmers are also a benchmark for the rest of the industry. However not every farmer wants to deliver their crop to Ferrero, because they pay slightly lower prices and will try to keep these low. Nevertheless they pay the farmers cash, which not every packer can do. There is also some pressure on those prices of Ferrero from the farmers, because they expect them to also support them a bit with higher market prices. Further with the extreme inflation rates they rely on the biggest buyer/packer that they also support the business a bit from a broader point of view. With the current levels of about TL 12.- / kg. from Ferrero and around TL 13.- form other exporters, the 450.000 farmers in the Black Sea area have been a bit reluctant up till now, to bring their crop to the market. They are still hoping and expecting higher prices. Especially when next year February there will be regional elections again in Turkey.
We feel that with the more than average crops in Georgia, Azerbaijan and especially Italy, there will be enough hazelnuts for world demand in the coming season. Despite a relatively smaller crop than expected in Turkey, the economic developments and potential financial problems among packers will mainly determine the market in Turkey. They do not like to send farmers away when they come to sell, but if they lack the funds to purchase, farmers will have to adjust their levels to have their material sold elsewhere.
Today we see slightly firmer levels again in origin due to the Turkish Lira, but the market fluctuates on a daily term it seems.
If you have a specific request for any type of conventional or organic Turkish hazelnuts, please do not hesitate to contact us.