Market Update: Hazelnuts, China axes demand

ORDU. With May around the corner, attention is shifting towards the new hazelnut crop in Turkey. Although things are quite encouraging, China’s zero-Covid strategy is giving suppliers headaches. Ferrero’s response to the TMO’s attempt to lift prices will also shape the market in the weeks to come.

TMO’s dilemma

Next year’s general elections have made the state-run organization difficult. Although traders and exports have shunned the recent TMO offer for raw hazelnuts price is too high, things may turn crazy in the next few months. Issue are speculations over the price the TMO may set for the new crop. As approval is declining for president Recep Tayyip Erdoğan’s ruling AKP party, the organization may try to appease farmers by offering high prices. Rumour has it that prices may even be raised. 

At the same time, the body, however, also realizes that it has to remain reliable and refrain from harming exports with too high prices.

Ferrero is another issue as the reaction to any prices set by the TMO will largely determine the market situation. How far the market leader may or may not buy in Turkey largely depends on supplies in other countries. Azerbaijan is, for instance, keen to step up shipments and even became the third-largest exporter in the first quarter of this year, as the Ministry of Agriculture recently stated. The country produced 60,000-67,000 mt of inshells in 2021, thereby overtaking Italy. After last year’s production proved a disaster in Italy, prospects are encouraging for this year’s production at present. Producers are, nevertheless, concerned over the potential impact of drought. (Mundus-Agri) 

Zero-Covid strategy axes demand

Traders in Turkey also reported that China had gone completely bananas. While the country’s zero-Covid strategy comprising the lockdown in Shanghai and lockdowns threatened in other cities has sent shockwaves throughout the global economy, the impact on Turkey’s hazelnut market is devastating. The new quarantine measures mean that all cargo, even documents, are delayed at customs to avoid contamination. Demand from China peaks typically around this time but has been axed this time round.

Buyers and traders in China are doing their best to mitigate concerns as they state that the ports in Shanghai should reopen in May. They also report that the pandemic situation in Beijing is well under control and that a full-scale lockdown will be avoided. In addition, it should be noted that normal life has resumed in most parts of the country. Suppliers in Turkey are not quite convinced that the situation will improve quickly and prefer to wait and see what way things will turn. (Mundus-Agri)

Subdued demand

Demand remains mainly subdued, especially in Europe, which is typical for this time of year as attention is shifting towards the new crop. The realization has kicked in that sufficient supplies are available. Prospects have remained encouraging so far, and new estimates will be issued in May. Although the crop has survived the risk of frost without substantial damage, drought and excessive heat may still impact the tress in July and August. The International Nut and Dried Fruit Congress, which will be held in Dubai on 11-13 May, will also provide new insights into the demand situation.

Domestic demand is also deficient, and manufacturers are not buying at present. Raw hazelnuts size 11-13 mm and 13-15 mm, are still trading at TRY 75.00/kg. Exchange rate fluctuations compensate for the slump in demand in Europe as the Turkish lira has recently gained slightly against the euro and US dollar.