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I’m convinced that Nutella is the second most important invention after the wheel. So yes, I’m an unapologetic hazelnut fan.

That said, a few months ago I started to notice something odd. The price of natural hazelnuts had more or less doubled. Shortly after, they became surprisingly hard to find, at least in supermarkets where they had always been readily available.

That caught my attention. And it made me wonder whether something unusual had happened, or was still unfolding, in the hazelnut market.

Hazelnuts: a commodity shock without a market

Hazelnuts are a small commodity with an unusually concentrated supply chain. Around 70% of global production comes from Turkey, with output overwhelmingly concentrated in the Black Sea region, where soil, rainfall and climate conditions are uniquely well suited to hazelnut trees. Few agricultural commodities display such geographic dependence.

That concentration extends beyond geography into labour. Roughly 600,000 farmers grow hazelnuts in Turkey, mostly on small, family-owned plots. Including processing, logistics and trade, an estimated five million people are directly or indirectly involved in the hazelnut economy. Production is fragmented, local and labour-intensive, a structure that shapes how the market functions in times of stress.

An opaque market by design

Hazelnuts do not trade on any major agricultural exchange. There are no futures contracts, no central clearing, and no benchmark price. Transactions are negotiated directly, often verbally, between farmers, wholesalers and exporters. Prices are quite literally “called on the phone”.

This makes the market largely inaccessible to non-commercial participants and almost invisible from a traditional commodity-market perspective. Yet physical supply and demand still clear, and when supply is disrupted, prices can move violently.

A rare but severe supply shock

In April 2025, hazelnut growers along Turkey’s Black Sea coast woke up to the worst possible surprise: a late frost sweeping through the region. Frosts like this are rare, maybe once a decade, but this one landed at exactly the wrong moment.

The spring had been unusually warm, pushing hazelnut trees to bud and flower earlier than normal. When temperatures suddenly dropped, the trees were completely exposed. The damage was immediate and widespread. Early estimates suggest around one-third of Turkey’s hazelnut crop was wiped out in a matter of days.

And the frost was only part of the story. Turkish growers had already been dealing with mounting pressures. The brown marmorated stink bug, which arrived in the country around 2017, has become a persistent threat, capable of destroying 10–20% of output in bad years. On top of that, the summer of 2024 was the hottest and driest in more than 60 years, leaving trees stressed and less resilient going into the 2025 season.

By the time the frost hit, the crop had little margin for error, and the market has been paying the price ever since.

Taken together, the result is a severe imbalance: available supply in 2025 is likely to meet only about half of global demand.

How prices behave without a benchmark

History provides a guide to what happens next. Following similar frost events in 2004 and 2014, hazelnut prices more than tripled. In the 2014 episode, prices began rising immediately after the frost in March, peaked in late April to early May 2015, and then fell by roughly 50% within one to two months as demand adjusted and inventories were released.

Chart 1 illustrates this typical pattern by using a stylised price index. The spike is sharp, front-loaded and driven by physical scarcity rather than speculative positioning. The subsequent correction reflects demand rationing rather than a recovery in supply.

A problem with the structure of the supply

When the price of hazelnuts goes up, supply doesn't rush in to meet it. There is no easy answer. It takes years for hazelnut trees to grow up, you can't plant new orchards overnight, and there aren't many other countries that can grow them. Most of the production still comes from small, family-run farms that don't have much access to capital and can't grow even when prices are high.

Because of this rigidity, shocks in the hazelnut market tend to look awful. The market doesn't make small changes; instead, it swings suddenly: prices go up, volumes go down, and buyers have to adapt on the fly.

Chart 2 captures the core of the current problem: demand remains broadly intact, but supply has been structurally impaired.

A market that matters, even though it's hard to see

Hazelnuts may not be in the world of futures contracts and electronic trading screens, but they are an important part of the global food supply chain. There is steady demand for spreads, chocolates, biscuits, and baked goods, and it will be hard to find something else to fill the gap in the short term.

Combine that demand with a highly concentrated production base, rising climate volatility and biological risks, and the result is a market that is unusually fragile. When something goes wrong, there are few buffers, and the adjustment is sudden, not smooth.

The lesson from 2025 is not just about hazelnuts. It is about how physical commodities behave when there is no buffer of inventories, no financial market to absorb shocks, and no rapid supply response. In such markets, scarcity does not emerge gradually; it arrives all at once.

• EUR/USD tumbles 0.75% as Kevin Warsh’s Fed nomination boosts US yields and Dollar demand.
• Hot US producer inflation reinforces the Fed’s steady-rate stance, lifting Treasury yields above 4.25%.
• Strong German and Eurozone GDP data fail to offset Dollar strength driven by policy repricing.

EUR/USD drops during the North American session, down by 0.75% amid a session characterized by overall US Dollar strength, sponsored by Trump’s mild-hawkish pick to lead the Federal Reserve and an inflation report that warrants steady rates by the Federal Reserve. At the time of writing, the pair traded at 1.1882 down from daily highs of 1.1974.

Euro sinks below 1.19 as hawkish Fed leadership signals and sticky inflation crush rate-cut hopes

Kevin Warsh is Trump’s election to be the next Fed Chairman of the Federal Reserve, confirming rumors that leaked late on Thursday. The financial markets sent precious metals tumbling, while the Dollar nearly 1% according to the US Dollar Index (DXY), which tracks the buck’s performance against six peers.

The DXY is poised to end the day past the 97.00 figure. US Treasury yields rose with the 10-year yield rose nearly one basis points at 4.25%.

In addition to Warsh naming, US inflation in the producer side edged higher, distancing from the Federal Reserve’s 2% goal, justifying the Fed’s decision. Aside from the release of the Producer Price Index (PPI) figures for December, speeches by Federal Reserve officials grabbed the headlines.

Breaking news revealed that the US Senate reached a deal to get the government funding package through chamber tonight, averting a shutdown, according to Politico.

US Treasury yields are rising in a sign that speculators see fewer odds that Warsh could cut rates “indiscriminately” to please the White House. The US 10-year Treasury note yield is up one and a half basis points at 4.247% as of writing.

In Europe, the German economy rose by 0.4% YoY exceeding estimates. Better-than-expected Gross Domestic Product (GDP) figures in Germany and the Eurozone, and the uptick in German inflation, have failed to provide any significant support to the pair.

Next week, the US economic docket will feature a tranche of US jobs data, speeches by Fed officials and the ISM Manufacturing and Services PMIs for January. In Europe, HCOB Flash PMIs for the bloc and for Germany and France, and the European Central Bank monetary policy meeting, could trigger some volatility in the EUR/USD pair.

Daily market movers: The Dollar’s comeback, tumbles the Euro

• St. Louis Federal President Alberto Musalem stated that the central bank does not need to cut interest rates further at this time, as the current 3.50%-3.75% policy rate range is roughly at a neutral level. He said further reductions would only be justified if the labor market deteriorates sharply or inflation drops materially
• Fed Governor Stephen Miran said Kevin Warsh would be an excellent choice for the Fed, adding that the recent rise in producer prices has been driven mainly by housing costs and portfolio management fees.
• Meanwhile, Christopher Waller noted that the labor market remains weak despite steady economic growth. He argued that inflation would be close to 2% were it not for tariffs, which he said kept price growth near 3%, and added that monetary policy should be closer to neutral, around 3%.
• Atlanta Fed President Raphael Bostic urged patience on policy, saying rates should remain somewhat restrictive. He warned that the full inflationary impact of tariffs has yet to materialize and expects price pressures to remain persistent.
• The US Bureau of Labor Statistics showed Producer Price Index (PPI) inflation held steady at 3.0% YoY in December, unchanged from November and missing expectations for a slowdown to 2.7%. Core PPI, which excludes food and energy, accelerated to 3.3% YoY from 3.0%, defying forecasts for a decline to 2.9%, underscoring continued upstream price pressures.
• Gross Domestic Product (GDP) for the last quarter of last year in the European Union expanded by 1.4% YoY, unchanged from Q3, but above forecasts of 1.2%. In Germany the economy in Q4 exceeded estimates of 0.3%, rose by 0.4% YoY, up from Q3 0.3% growth.
• Germany’s inflation in January as measured by the Harmonized Index of Consumer Prices (HICP) ticked a tenth up from 2% to 2.1%, but within the European Central Bank’s target.

Technical outlook: EUR/USD uptrend at risk, after diving below 1.1850

The EUR/USD technical picture shows that the uptrend is at risk after breaching 2025 yearly high of 1.1918, exacerbating a drop below 1.1850. The Relative Strength Index (RSI) showed that momentum shifted mildly bearish, which could pave the way for further downside in the pair.

In that outcome, the EUR/USD next support would be 1.1800 which if gives way, can send the pair to the 20-day SMA at 1.1743.

On the flip side, the EUR/USD first resistance is 1.1900. If reclaimed, the next key resistance would be 1.1950 followed by the yearly peak at 1.2082.