We have spent the last few days touring the growing regions in and around Malatya, and the key points we observed are as follows:
- The frost of 14 April caused most damage on fruitlets where bloom had already finished, and less effect on areas that were in bloom.
- Damage to orchards below 850 Meters elevation is severe with most areas showing zero fruit. This includes many important growing areas around the Keban Lake including Battalgazi, Alisar, Dilek, Merkez, Kale and Yazihan.
- Areas on the slopes above the valleys generally show little to no damage the further up the slopes you go the heavier the fruit set.
- Quality is mixed so far with a higher proportion of speckles and hail damage than last year.
Currently we are expecting a crop between 80,000 and 90,000 tons with no carryover, so a very similar total supply to last year.
Price expectations for 2022 crop
- There is no carryover in Malatya and consuming markets also report a lack of stock. There will be strong interest in first shipments.
- Inflation is running over 70% in Turkey and export commodities are seen as a safe haven asset by growers and traders.
- Prices have consistently increased over the past 18 months, it is unlikely growers will look to sell more than they need to early in the season.
- Last years crop has been exported in its entirety despite record prices, indeed the total tonnage exported from 2021 crop up to April is very similar to 2020 crop showing no demand destruction (we have seen a slowdown in exports in May see below)
- On the other hand the average price for the crop was significantly below where prices are today, as preseason sales were at lower prices bringing the average down. Are prices now high enough to reduce consumption? Nobody knows.
- Growers will demand immediate payment, and smaller packers will be less able to finance purchases.
- We can not predict the Lira exchange rate going foreword, significant movement in either direction is possible depending on political policy.
- Exports in May were 3,616 tons compared to 5,595 tons last year and 7,138 tons last month.
- Year to date exports are 74,762 tons compared to 78,353 tons last year.
The slowdown in exports in May is greater than expected, and is likely due to packers deferring contracts into new crop, and buyers reluctance to contract at current high prices ahead of the bloom incase of a big new crop (which did not materialise).
We think it is likely that with the market generally short of current crop prices will remain firm in the short term.
Freight rates are still sky high.