The 2019 crop expectation is 800K in shells – which is a record crop for the last 10 years. Prices dropped in the earlier part of the season, but the Turkish Grain Board (TMO) intervened in early October to give a floor price of 16 TL in-shell – around 32 TL kernel equivalent. TMO ended up purchasing around 80K in-shells and supported the market. Post-December, the liquidity suddenly dried up, possibly due to 2 reasons:
Excessive shorts by exporters in expectation of price drops – exporters scampered to cover their shorts, inflating prices
TL devaluation meant local prices spiked higher, leading to many speculators entering the market and hoarding stocks.
The overall market moved up from 32 TL to almost 40 TL in January. The TMO released 30K of its inventory in late February at 20.50 TL in shell / 41 TL at the end of February, providing a ceiling to the market prices.
Current Week’s Report
The market remained volatile with lower liquidity amidst the frost news, COVID-19 chaos, and an unpredictable Lira. The first flower count exercise for 2020 crop concluded earlier in March. After the flower count impact and the frost impact, 2020 crop expectation will be at best 600K, which is much lower than the 2019 crop. There are now issues like larger transit times due to border control, unavailability of trailers/drivers, an increase in call-offs from certain manufacturers, etc. Though there is no impact immediately on demand, there is a certain uneasiness evident in the trade on how things would pan out in some months.
TMO is expected to release some stocks in April. This should bring back liquidity to the market, and give an indication of the price ceiling in TL. The market expectation is that TMO would indicate prices “slightly higher” than the last time. TMO has also indicated to only release Levant type, holding back the Akcakoca and Giresun varieties.
The TL has been extremely volatile this week. We have seen movement from 6.70 acks to 6.40, before settling around 6.45 by end of the week
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