Italian Hazelnut Prices Creep Higher as Input Costs Fall, but Consumer Demand Remains Weak

Hazelnut kernel prices in Europe have steadily increased since bottoming out in September/October 2022, reaching the highest price in 13 months at USD 14.29/kg in May. Lower input costs have enabled buyers to raise prices when purchasing raw materials, while still protecting their profit margins. However, ample global supplies will keep increases in check in the short term, as European demand and imports remain weak. A return in consumer demand is projected over the medium to term and could accelerate the price recovery.
Hazelnut kernel prices in Europe are continuing their slow but steady recovery. In the first week of May, prices reached USD 14.29/kg, the highest level in 13 months. While monthly price changes in hazelnuts have been small, they have compounded since prices bottomed out in September/October 2022. Lower input costs have enabled buyers to steadily raise the prices they are willing to pay. As input costs have decreased, importers are willing to make purchases at higher prices while still protecting their profit margins. Hazelnuts are primarily used as an ingredient for spreads, pastries, and candies, which means that energy, transportation, and packaging costs make up a significant portion of the final product. Since hazelnut prices bottomed out in September 2022, the EU CPI for energy has dropped by 8%, and Brent Crude oil prices, an indicator of transport costs, have dropped by 18%. The recovery in prices has not been driven by increased demand, at least not yet. Estimates show that Europe's imports of hazelnuts in Q1 2023, mostly coming from Türkiye, Georgia, Azerbaijan, and increasingly from Chile, were still below that of 2022. As living costs increased in the last two years, nut snacks and products were scrapped from household food budgets to make room for more essential products. However, judging by the FAO Food Price Index, which has decreased by 6% since October, there could soon be room again for nuts on consumers' shopping lists. While hazelnut prices are on an upward trend, this is not primarily due to increased consumer demand but rather lower input costs. In the short term, ample hazelnut supplies globally will keep price increases in check. A recovery in consumer demand could accelerate the upward trend, but this may not happen until the 2023/24 marketing year.