Turkish Pistachio Faces Stiff Competition Amidst Oversupply in 2023/24

Pistachio Kernel

Raw Pistachio

Turkiye

Market & Price Trends

Published Nov 23, 2023

Abundant supplies of Turkish pistachios are anticipated throughout 2023/24, driven by robust production and record imports in the preceding MY. Although 2023 is an off-year for pistachio production in Türkiye, the country is projected to yield a respectable crop of 176,000 mt, a modest decrease of only 26% compared to the typical off-year drop of around 60%. Capitalizing on low global prices in the 2022/23 MY, Turkish importers brought in a record-high 50,863 mt, resulting in a substantial oversupply. Consequently, Turkish exports are expected to see a significant uptick in 2023/24. Importers could actively seek lower-priced offers from Türkiye compared to the US and Iran throughout the marketing year.

Decreased Variation Between On and Off Years

In the biannual production cycle of pistachios in Türkiye, 2023 is an off-year. Production dropped on account of it being an off-year, but a respectable crop of 176,000 metric tons (mt) is expected, according to the second crop estimate of the Ministry of Agriculture and Forestry. This is a drop of only 26% year-on-year (YoY), significantly less than the normal drop between on and off-years, which in the past were often as much as 60%. The lower drop is a testament to the Turkish pistachio industry’s advances in terms of orchard management and production techniques, emphasizing optimal soil conditions and irrigation. According to the United States Department of Agriculture (USDA) Foreign Agricultural Services (FAS) in Türkiye, initiatives like the "May you have abundant pistachios" project, led by The Turkish Foundation for Combating Soil Erosion, for Reforestation and the Protection of Natural Habitats (TEMA) and private companies, have significantly increased yields, by training farmers in advanced tree care techniques.

Overcommitment of Importers

During the 2022/23 marketing year (MY), from Jul-22 to Jun-23, Turkish importers brought in a substantial 50,863 mt of pistachios (on an in-shell basis), marking a record high for an MY. This was despite a robust domestic production of 239,289 mt in 2022. This influx of imports has resulted in an oversupply scenario, pushing ending stocks by the close of 2022/23 to a significant 76,000 mt. Turkish importers capitalized on reduced pistachio prices in the 2022/23 MY, anticipating a price increase in 2023/24 and possibly an opportunity to export at a higher price. The majority of Turkish pistachio imports are sourced from the United States (US), and Türkiye could primarily target the Middle East for exports. However, the importers’ overcommitment was a risky strategy, given that global production will be the second highest on record, significantly increasing competition among exporters.

Domestic Consumption Set to Increase

Türkiye’s domestic consumption is highly correlated with production and the availability of pistachios. However, 2022/23 saw comparatively lower domestic consumption as households struggled with high living costs, exacerbated by the weakening Turkish lira. While these economic woes are expected to continue, domestic consumption in 2023/24 could be comparatively high for an off-year. In Türkiye, consumers exhibit a notable tendency to switch between various nuts for food ingredients, influenced by factors like price and availability. The interchangeable use of pistachios, hazelnuts, walnuts, and almonds in dishes and the snack market could prove beneficial for the abundant pistachio supply.

Competitive Export Landscape

The abundance of stocks is expected to increase exports in 2023/24. However, Türkiye is likely to encounter intense competition from the US and Iran, which are anticipating on-year crops. Global pistachio production in 2023/24 is expected to surpass 1 million metric tons (mmt), a significant increase from the 750,000 mt produced globally in 2022/23. This will result in a significantly more competitive market, especially in Europe. Türkiye primarily exports to the Middle East and Europe, with a notable rise in exports to the Middle East in 2022/23. In 2023/24, Türkiye may continue targeting the Middle East, leveraging its regional advantage, while the US, boasting a record crop, will target the European and Far Eastern markets.

Opportunities and Risks Amidst Large Inventories

Realistically, Turkey may face challenges in significantly reducing ending stocks by the end of 2023/24, given the substantial global pistachio crop and stiff competition. With 2024 being an on-year for Turkish pistachios, the domestic market will actively seek to decrease ending stocks during this period. Seen in isolation, the price outlook for pistachios is mostly bearish due to the large global crop. Nevertheless, Turkey stands to benefit from the ample supply of pistachios, given the bullish price trend observed in other nut markets. The upward trajectory in prices for alternative nuts is also pulling pistachio prices along in the slipstream.

Regardless, Turkish pistachios will need to be priced attractively compared to offerings from the US and Iran to remain competitive. Importers could be on the lookout for price offers from Türkiye that are lower than those of the US and Iran at various points in the marketing year.