The crop sizes across most origins have been as per the expectations. While we have a record Turkish crop of around 800K MT, shortages in Italy, Oregon and Georgia have wiped out the surplus to some extent.
In Turkey, we expect the farmers/ Manavs to be still carrying around 100-125K inshells, and this balance crop will steadily flow into the market in the coming months.
TMO is holding stocks to the tune of around 80K MT.
The availability of the product was a concern during December and early January, as an extremely volatile currency and holiday period had put the market at a complete standstill.
In the past week, we have seen better availability of product as currency stabilizes around 13,50 levels. The inshell availability still seems limited, but kernel availability is better since many crackeries are now willing to sell a part of their stocks given the high cost of carry.
Current price levels for inshells are around 35-36 TL/kg, depending on the region and quality. We believe these are fair levels for the market to settle post currency fireworks.
The exports this year are notably higher than the last year, but we believe it has more to do with replacement of the Italian short crop, rather than a large increase in demand.
Most large confectioners, as well as retailers, have closed their tenders for the season, and we do not expect any large requirement coming soon. However, mid-size companies, bakery segment and Italian manufacturers still seem uncovered, and are actively inquiring for spot deliveries.
Ferrero, too, seems to have covered its seasons demand and might source for the remainder of the season, unless we see any adverse news on the next crop.
In short, we expect slow demand, as well as trickling supply in the next few weeks. We also expect relative stability around the current levels — with a rider that the currency stays fairly stable.
We now waiting for two important pointers for the market moving forward in February: flower count and growth indications during February. These will provide important guidance, especially for the farmers/Manavs still holding stocks. If we do notice problems, we might see a sharp reduction in supply.
TMO sale time and price:
The TMO, too, is expected to wait for the flower count to decide on their selling strategy. In case of lower flower counts, they may release the stocks slower. Also, the market believes that the TMO will wait for the inshell prices to touch $3/kg (at 13,50 TL/$ - this translates to 40 TL/kg). We believe this might be speculative information, and the TMO decision to sell would be based on the absolute TL value, rather than the U.S. dollar price.