Turkish Hazelnut Production Forecasted to Increase Amid Lower Prices and High Production Costs

The Turkish Ministry of Agriculture and Forestry has announced its hazelnut production forecast for the 2022/23 season and put it at 765 thousand mt, a 12% YoY increase. Despite experiencing sub-zero conditions in the third week of March, with temperatures dropping to as low as minus 8 degrees Celsius, production in the Ordu province, the top hazelnut-producing province in Turkey, is forecast to an approximate 240.6 thousand mt.

After the earlier frost, authorities in Turkey announced that there would likely be significant damage to output in the affected areas. However, the crop production forecast released in early August stated that the overall impact of the March frost was minimal.

If the forecasted production is accurate, it will be the third-highest crop on record, surpassed only by the 800 thousand mt 2008/09 crop and the 776 thousand mt in the 2019/20 season.

Despite the increase in production, the Turkish hazelnut industry could have a challenging year ahead. The weak Turkish lira and high inflation are driving up input costs, whereas the price of hazelnuts has not increased by much. Hazelnut prices are under even more downward pressure from increased global production, especially in Italy, which is in an on-year of their biannual production cycle. As a result, Turkey’s market share in world hazelnut production could remain close to 70-75%. However, it is facing more and more competition from other producers, for example, the US and Chile, where production is expanding rapidly.

According to Alex Zeid, Tridge’s Origination Manager, price indications for Turkish hazelnuts have been flat at around USD 540-560/100 kg for the Levant quality. However, prices have fallen by over 10% compared to the previous season. The majority of the decline can be attributed to the weakening lira. “On the 25th of July, the Turkish lira was down 7.2%, sustaining a slow decline towards 18 against the US dollar (17.83 on 25th July). The lira continues to be pressured by the Turkish Central Bank, which is easing monetary policy, while it is also being weighed down by the US dollar’s strength”, he mentioned.

Turkish hazelnut export volumes have been high during the 2021/22 season, and according to the Black Sea Exporters Association (KFMIB), from September to March, 247 thousand mt of hazelnuts have been exported. This is 34% more than over the same period in the 2020/21 season. Based on historical data, exports could reach a record 350 thousand mt on a shelled or 700 thousand mt on an in-shell basis in the 2021/22 marketing year. The strong exports from the 2021/22 season will take a chunk out of stored inventories, leaving lower opening stocks in the 2022/23 season. As a result, exports for 2022/23 could drop slightly from 2021/22.