Harvests across regions is now mostly completed. October marked a significant decrease in demand across categories for Hazels, as prices peaked during September to more than 18 $/kg. Market has seen a moderate decline in prices as supply continues to improve while demand remains sluggish.
Supply
- Crop Estimate: Most market analysts now believe the crop size in Turkiye to be close to the 550K mark. This is better than some conservative estimates previously being circulated.
- Chile crop has crossed 110K MT (up from 65K) and has provided some cushion for the largest buyer.
- Turkey Crop Quality: As we receive more material across regions, we see 2 distinct concerns in the crop quality
- The 13–15 ratio, especially in the Akçakoca region, is extremely low — dropping from around 45% to as low as 20%. Availability of 13–15 and 13–14 gradesduring this season may therefore be limited.
- Insect damage has increased significantly, contrary to expectations. Last year’s already below-average crop had damage levels of around 10–12%, while this year’s crop shows around 18%. This will likely lead to higher selection losses and, consequently,increased processing costs
- Supply Outlook: Over the past 2–3 weeks, we have observed an improvement in supply, which has contributed to easing prices. The market has seen an influx of offers from the US and Georgia, which has reduced demand for the relatively more expensive Turkish origin. As a result, prices for Turkish origin have also come down.
Demand
- The Largest buyer has been watching from the sidelines in Turkey so far, thanks the cushion from other origins like Chile. This has led to some frustration for hoarders, who now have to liquidate a portion of their stocks to cover for the high interest cost. We expect the largest buyer to cover from Turkey soon.
- Larger industrial buyers have mostly covered Q4 and early Q1 needs, and many continue to cover their needs as supply has improved.
- Domestic Market: Still sluggish, with many reducing annual tender volumes. Higher prices expected to hit the domestic demand further.
- Turkish exports have fallen significantly this season compared to last season at this time of the year. Some demand is getting deferred, where larger buyers are preferring to source in shorter cycles, and carrying lower inventory at their end.
Market Outlook
- Supply Balance: Despite Turkey’s lower crop, adequate overall supply is expected, supported by carryover, better crops in other origins and reduction in demand. We also believe the prices are still at unreasonably high levels despite coming off 10-15% from the peak in early September.
- Price Trends: Prices climbed to the all-time peak of 720 TL/kg - almost 18 $/kg by mid-September, albeit with very thin trading volume. Prices have eased to below 640 TL/kg, around 15,5 $/kg - but still at multi year highs. The market is showing signs of stabilization at these levels as trades have increased.
- Forward View: Most larger confectioners seem to have bitten the bullet and covered at least for their immediate needs. The largest buyer is also expected to enter soon, supporting prices for the near future. On a longer term though, the supply-demand gap will widen in favor of the supply, and gradually prices should further come off the multi-year highs. Post Jan/Feb, all eyes would turn to development of the next season crop.
Despite Turkey’s below-average crop, global Hazelnut supply remains sufficient as supply improves, and demand reduces. While short-term demand and the major buyer may keep prices buoyant in the near term, a gradual correction is expected as supply continues to normalize.
Conclusion
What’s your take — are we entering a period of balance for hazelnuts, or just a brief pause before the next round of price swings?