After years of record commodity prices and extreme volatility, confectionery, cereals and spreads makers can at last look forward to lower prices for hazelnuts.

Basic hazelnut kernel prices have more than doubled since 2009 - rising from $4,140/t (£3,037/t) to $8,500/t - as poor harvests for the world’s largest hazelnut producer, Turkey, put a squeeze on global supplies. Last year, the global shelled hazelnut crop was just 450,000 tonnes against worldwide demand of 550,000 tonnes, leaving Turkey to resort to using up old stocks from 2008 in order to balance demand.

Commodity prices: Robusta coffee up 11.4%

Strong demand for Robusta coffee has continued to push up prices over the past month, as consumers and coffee blenders increasingly switch to cheaper alternatives to Arabica. At £1,412/t, Robusta prices are currently 11.4% up on last month, although they remain cheaper year-on-year.

Crude oil prices are still falling, driven down by concerns about the debt crisis in the Eurozone, with electricity prices also down by 15.2% over the past month and down 23.5% year-on-year.

The gloomy economic outlook is also taking its toll on the cotton markets, with prices now nearly 50% below 2011 levels. A new USDA report forecasting a 9% increase in US cotton production has further depressed prices.

Turkey’s hazelnut stocks have now run out, but there is no need to panic, as the prospects for this year’s harvest in September are looking good, with Turkish kernel crops currently forecast to reach 350,000 tonnes. There is also good news from Italy, which produces about 17% of the global hazelnut crop - favourable weather, including no major frosts and timely rains, means the country’s output this year is expected to be better than usual, coming in at about 60,000 tonnes of kernels.

Despite the promising signs from Turkey and Italy, buyers would do well to keep an eye on the weather in both countries during June, however. Things can change quickly in the hazelnut market, and May and June tend to be the months that help determine just how successful the harvest will ultimately be in September. This time last year, a three-week period of unseasonably hot and dry weather on the Turkish Black Sea led to the destruction of 200,000 tonnes of in-shell crop.

If everything goes smoothly, however, and there are no nasty surprises, the price of hazelnuts could drop to $5,500/t - a good 35% below the record price of $8,500/t currently seen in the market.

It looks like the hazelnut market could crack at last.

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