According to reports from different regions, the expectation for new crop will be roughly 10% less in volume than 2017 crop season which will equate to, more or less, 270.00 – 280.000 tons, some regions are better than last year, some regions are worse than last year. In general Alaşehir and Sarigol region is worse than last season and till today we have seen local hail damage in Saruhanli region.
When we look 2017 crop bourse registrations, it is likely there will not be a carry over from 2017 crop season, or very little, to 2018 crop season, which means packers will start 2018 crop season as it is.
As you follow from the general market, USA Thompson prices have been very high, some part of the demands for Thomson’s has carried over to Turkey. At the beginning of the crop season, Thompson prices were 4,5 tl levels but we have seen them lately as high as 8,5 tl levels. Due to good weather conditions during 2017 crop harvest, there was not the necessary available dark fruit within the market and the colour gap between types are very close to each other, due to that reason limited dark coloured fruit was firm within the market. We expect more or less 7-8 % of Thompson was harvested during 2017 crop season but we expect approx 15% of Thompson for 2018 crop season.
When we compare last two years crop with 2018 crop, 2018 crop continues more or less 10-15 days earlier than previous years. Authorities have been informing farmers to be careful to follow berries developments to apply the right pesticides on time, if farmers miss any of the pesticide applying time frame, new diseases may occur within the vineyards, like in 2014 season, when 2014 crop season was very good crop season but during harvest there was seen a variance of colours and quality, because farmers missed last pesticide application for black mould.
Additionally, there will be a president and member of parliament election in Turkey on 24th June 2018. Manisa region is an important area for government and they have to give assurances to farmers in Manisa region. At the beginning of 2017 crop season, Government interfered with the raw material prices through TMO and Tarim Credit Cooperative, which meant they bought more or less 10.000 tons of product and packers saw first hand the affect in the market, raw material prices increased to 4,3-4,4 tl levels where they were 3,7 – 3,8 tl levels. We expect that government will interfere with raw material prices at the beginning of 2018 crop season under promises of government during election. If government promise something, they have to respect this, otherwise they may loose votes during local election in March 2019.
As you know new crop prices always from how old crop prices finish, if we see raw material price increase till end August 2018, we can say TMO and Tariş have to announce their prices up to market conditions, which are expected 6,5 – 7,0 tl levels (1450 – 1550 usd/mtone, with usd/tl 4,57). If TMO and Tariş are in the market and purchase raw material at these levels, the next question will be, how much quantity will they buy?
The biggest points are how currencies will continue and how other origins will affect world markets, such as the USA. According to Economics, they expect Turkish Lira will be strong against USD if Erdogan wins and get support from Parliament.
As a summary of our view, we can say that importers should be patient and follow market conditions, if we get 270-280.000 tons of raw material during 2018 crop season, there will be enough product in market for export. Perhaps we can expect to see a similar scenario to 2015 crop season, Tariş announced raw material prices at 5,50 – 6,00 tl levels but then market prices decreased after a short time of period, potentially we may see a similar scenario happen again.