I am convinced that Nutella is the second most significant invention after the wheel. So yes, I am an uncompromising fan of hazelnuts.

That said, a few months ago I started noticing something strange. The price of natural hazelnuts has approximately doubled. Soon after, they were surprisingly demanding to find, at least in supermarkets where they were always readily available.

This caught my attention. I began to wonder if something unusual had happened or was still developing in the hazelnut market.

Hazelnuts: a commodity shock without a market

Hazelnuts are a diminutive commodity with an extremely concentrated supply chain. About 70% of world production comes from Turkey, with production concentrated mainly in the Black Sea region, where the soil, rainfall and climatic conditions are exceptionally well suited to hazelnut cultivation. Few agricultural commodities show such geographical dependence.

This concentration extends beyond geography to include work. About 600,000 farmers grow hazelnuts in Turkey, mostly on diminutive family plots. Including processing, logistics and trade, it is estimated that five million people are directly or indirectly involved in the hazelnut economy. Production is fragmented, local and labor-intensive, and its structure shapes the functioning of the market in times of stress.

An muddy market by design

Hazelnuts are not traded on any major agricultural exchange. There is no futures contract, central clearing or reference price. Transactions are negotiated directly, often orally, between farmers, wholesalers and exporters. Prices are literally “talked on the phone.”

This makes the market largely inaccessible to non-commercial participants and almost hidden from a established commodity market perspective. However, physical supply and demand are still unclear, and when supply is disrupted, prices can skyrocket.

A uncommon but sedate supply shock

In April 2025, hazelnut growers on Turkey’s Black Sea coast received the worst possible surprise: a overdue frost sweeping across the region. Frosts like this are uncommon, maybe once a decade, but this one came at exactly the wrong time.

The spring was unusually toasty, which caused the hazelnuts to bud and bloom earlier than usual. When the temperature suddenly dropped, the trees were completely exposed. The damage was immediate and extensive. Early estimates indicate that about a third of Turkey’s hazelnut crop was destroyed within days.

And the frost was only part of the story. Turkish growers were already coping with increasing pressure. The brown marbled stink bug, which arrived in the country around 2017, has become a persistent threat, capable of destroying 10-20% of production in bad years. Moreover, the summer of 2024 was the hottest and driest in over 60 years, leaving trees stressed and less resilient ahead of the 2025 season.

There was little margin for error in the harvest before the frost hit, and the market has been paying the price ever since.

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

How prices behave without a reference point

The story provides clues as to what will happen next. Following similar frosts in 2004 and 2014, hazelnut prices more than tripled. In the 2014 episode, prices began to rise immediately after the March freeze, peaking in overdue April/early May 2015, and then fell by approximately 50% within one to two months as demand adjusted and inventories were released.

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

Problem with the supply structure

As the price of hazelnuts rises, supply takes its time to meet it. There is no basic answer. Hazelnut trees take years to grow, recent orchards cannot be established overnight, and few other countries are able to grow them. Most production still comes from diminutive, family farms that do not have much access to capital and cannot develop even at high prices.

Because of this rigidity, the shocks in the hazelnut market look terrible. The market doesn’t make diminutive changes; instead, the situation changes suddenly: prices rise, volumes fall, and buyers must adapt on the fly.

Figure 2 shows the heart of the current problem: demand remains broadly intact, but supply has been structurally weakened.

A market that matters, although it is challenging to see

Hazelnuts may not exist in the world of futures contracts and e-commerce screens, but they are an significant part of the global food supply chain. There is constant demand for spreads, chocolates, cookies and baked goods and in the tiny term it will be challenging to find something else to fill the gap.

Combine this demand with a highly concentrated production base, increasing climate variability and biological threats, and you get an extremely delicate market. When something goes wrong, there are few buffers and adjustments are sudden rather than polished.

The lesson of 2025 isn’t just for hazelnuts. It’s about how physical goods behave when there is no inventory buffer, no financial market to absorb shocks, or a quick supply response. In such markets, scarcity does not occur gradually; it comes all at once.