As far as supply, Turkey is expected to have a record crop of 800k in the 2021-2022 season, although some of the gains are expected to be wiped off by the shortage of Italian and US crops. Overall, the crop size is around 7-8% higher over last year. We believe that farmers/Manavs are still carrying around 100K inshells and should slowly flow into the market. TMO has recently announced the sale of 20k off its 80k stocks this week, at a price level of 39 TL/kg. The price level indication was above expectations, albeit only slightly. This was expected to increase market prices by 10-15%, however, we have seen most exporters stay away from buying from TMO at the specified level, and we do not expect any large movements in pricing.
Product availability was a concern during the beginning of 2022, as an extremely volatile currency and holiday period put the market at a complete standstill. The TL has been relatively stable in the past few weeks and is now in the range of 13,25-13,75 to US dollars. Current price levels for inshells are around 37-38 TL/kg in the local market, largely influenced by the TMO sale price of 39 TL/kg.
Regarding demand, the exports from Turkey are notably higher over the previous year (200K compared to 155K MT), but we believe the increase predominately pertains to replacement of the Italian crop and inventory building in Europe, as well as the increase in consumption.
Most large confectioners, as well as retailers, have closed their tenders for the seasons, and we do not expect that demand volume anytime soon. However, mid-size companies, bakery segments and Italian manufacturers still seem uncovered, and continue to actively enquire for spot deliveries. The largest Hazelnut processor, too, seems to have covered its season demand, and might not participate for the rest of the season.
Overall, the next crop size will now be an important indicator of what’s to come. So far, the weather has been conducive for crop growth. The market will now be keenly observing this growth during the “frost risk” periods during March and April.
The price levels during the currency volatility were extremely lucrative for the European market and were covering in the first quartile. As the currency stabilizes, the local commodity prices have adjusted to now move the prices to a higher level.
We believe the downside to the market now is low, and given an election year coming up, the TMO will be included towards offering a price attractive to the farmer voters in the region.