Challenging Dried Fruit and Nut Markets Due to Currency Fluctuations

Spend Matters welcomes this guest post from Jara Zicha, senior market analyst at Mintec.

Argentina and Turkey are major global players when it comes to the dried fruit and nut markets. Argentina is a major supplier of peanuts into global markets and the top exporter into the E.U. along with the U.S. due to the superior quality of its produce. Turkey is a major exporter in a number of dried fruit and nut markets such as sultanas, dried apricots, figs and hazelnuts.

Recently, both countries saw a sharp devaluation in the value of their respective currencies. The Argentinian peso plummeted 17% over the course of a month, between April 24 and May 24, 2018, and is currently down 35% year-over-year. The majority of the fall has come over the past several weeks as the peso has been weighed down by a lack of investor confidence, despite the central bank raising its interest rate and offloading some of its foreign currency reserves. Among other issues, the peso has been under pressure from a high domestic inflation rate and a large debt.

The Turkish lira has been on a gradual decline over the past twelve months, owing to several reasons. The currency has depreciated due to political instability, a lack of confidence in the quality of Turkey’s economic growth and a damaged relationship with the U.S. Most recently, the lira has fallen further as President Erdogan expressed his intentions to take greater control over monetary policy after the elections in June, raising concerns over the future direction of Turkish economy. The lira fell to an all-time low in late May and has since recovered little but is still down 23% year-over-year.

A fall in the peso and lira has been certainly noticed in global nut and dried fruit markets, as it lowers prices for importers in their respective currencies due to favourable exchange rates. Sometimes however, lower prices might stimulate higher demand and this partly offsets the effect of currency depreciation. In general, however, strong currency fluctuations are not a welcome sign among global commodity traders as it increases risks of other parties defaulting on contracts. Lastly, producers of dried fruit and nuts at other origins should also pay careful attention to current developments in the Peso and Lira, as this will most likely impact their own markets.