diff --git a/skills/continuous-learning-v2/agents/observer-loop.sh b/skills/continuous-learning-v2/agents/observer-loop.sh
index a899124a..9bab37c5 100755
--- a/skills/continuous-learning-v2/agents/observer-loop.sh
+++ b/skills/continuous-learning-v2/agents/observer-loop.sh
@@ -205,9 +205,22 @@ PROMPT
   fi
 
   timeout_seconds="${ECC_OBSERVER_TIMEOUT_SECONDS:-120}"
-  max_turns="${ECC_OBSERVER_MAX_TURNS:-20}"
+  # Auto-scale max_turns proportional to analysis batch size when not explicitly set.
+  # The old hardcoded default of 20 is insufficient for the 500-line MAX_ANALYSIS_LINES
+  # default: Claude hits --max-turns before it can write all discovered instinct files.
+  # Formula: 1 turn per 10 analysis lines, floor 20, cap 100. (#2035)
+  if [ -n "${ECC_OBSERVER_MAX_TURNS:-}" ]; then
+    max_turns="${ECC_OBSERVER_MAX_TURNS}"
+  else
+    max_turns=$(( analysis_count / 10 ))
+    if [ "$max_turns" -lt 20 ]; then max_turns=20; fi
+    if [ "$max_turns" -gt 100 ]; then max_turns=100; fi
+  fi
   exit_code=0
 
+  # Sanitize max_turns. The auto-scaled path above always yields a valid value >=20,
+  # but an explicit ECC_OBSERVER_MAX_TURNS override may be non-numeric, empty, or too
+  # small, so guard here and fall back to the safe default of 20.
   case "$max_turns" in
     ''|*[!0-9]*)
       max_turns=20
diff --git a/tests/hooks/hooks.test.js b/tests/hooks/hooks.test.js
index 7ed88422..af0d0d24 100644
--- a/tests/hooks/hooks.test.js
+++ b/tests/hooks/hooks.test.js
@@ -3137,7 +3137,9 @@ async function runTests() {
       const observerLoopSource = fs.readFileSync(path.join(__dirname, '..', '..', 'skills', 'continuous-learning-v2', 'agents', 'observer-loop.sh'), 'utf8');
 
       assert.ok(observerLoopSource.includes('ECC_OBSERVER_MAX_TURNS'), 'observer-loop should allow max-turn overrides');
-      assert.ok(observerLoopSource.includes('max_turns="${ECC_OBSERVER_MAX_TURNS:-20}"'), 'observer-loop should default to 20 turns');
+      assert.ok(observerLoopSource.includes('max_turns=$(( analysis_count / 10 ))'), 'observer-loop should auto-scale max_turns from the analysis batch size when no override is set');
+      assert.ok(observerLoopSource.includes('if [ "$max_turns" -lt 20 ]; then max_turns=20; fi'), 'observer-loop should clamp the auto-scaled budget to a floor of 20 turns');
+      assert.ok(observerLoopSource.includes('if [ "$max_turns" -gt 100 ]; then max_turns=100; fi'), 'observer-loop should clamp the auto-scaled budget to a cap of 100 turns');
       assert.ok(!observerLoopSource.includes('--max-turns 3'), 'observer-loop should not hardcode a 3-turn limit');
       assert.ok(observerLoopSource.includes('ECC_SKIP_OBSERVE=1'), 'observer-loop should suppress observe.sh for automated sessions');
       assert.ok(observerLoopSource.includes('ECC_HOOK_PROFILE=minimal'), 'observer-loop should run automated analysis with the minimal hook profile');