Producer prices

Harvesting has started for many people from October.

This season looks promising, especially for the countries that had a bad harvest the previous year and saw their production almost halved. Let’s see the prospects of each country seperately:

• Spain set a new production record last season with approximately 1,78 million tons. Unfortunately, this year doesn’t seem to bode well for Spanish farmers as total quantities are expected to drop to 1,25 million tons according to Andalusian agricultural cooperatives and the EU commission. The main culprits for this decline are the alternate bearing nature of the olive trees (previous year’s overproduction) and the prolonged droughts that affected particularly the areas of Cordoba and Jaén.
• Good news for Italy as production is estimated to reach 330,000 tons , almost double from the last season, according to the confederations of Cia-Agricoltori Italian, Italia Olivecola, AIFO, Unapol and institute ISMEA. Propitious weather conditions and seemingly low infection rates of the trees from diseases and insects also helped to improve the harvest.
• Probably the biggest winner this season is Tunisia. According to the Tunisian Ministry of Agriculture olive oil production may well reach 350,000 tons, a new country record, placing the country as the world’s second largest olive oil producer after Spain.
• Greece is another country that will see a large boost in production (~300,000 tons compared to ~188,000 tons last year). One thing that those number don’t show however, is the huge increase of extra virgin olive oil that is expected (and the improvement of their quality characteristics) compared to previous season where there were a lot of availability and quality issues due to bad weather conditions and olive fruit flies.
• Turkey is expected to have minimal fluctuations in their production, reaching ~ 200,000 tons.
• Syria (~120,000 tons), Morocco ( ~160,000 tons), Portugal (~140,000 tons) will also see a healthy boost in their productions this season.

In conclusion, if weather conditions continue to be favorable, season 2019-2020 will be very good with world olive oil production surpassing 3,35 million tons. Only thing that remains to be seen is how smooth the harvesting is going to progress.

*We will soon post an article regarding the reserves of the past season, the private storage scheme of 300,000 tons of Spanish olive oil and how they are going to affect the prices in conjunction with the new production.

Harvesting has finally concluded in all olive producing countries and everybody is waiting for the demand trends of the new olive oil to start taking shape.

Spain’s production in particular, as we have already mentioned in our previous articles, is estimated to above 1,55 million tons. This quantity has the potential to blow the prices to even lower levels although they appear to have stabilized around the 2,85€/Kg spot for the good quality extra virgin olive oils. Both cooperatives and producers seem bent on keeping the prices to those levels, hence most of them refuse to sell any lower. On the other hand, Spanish and (especially) Italian bottling companies are avoiding long term purchases, focusing on covering only their short-term customer needs for fear of raising the prices higher.

Contrary to Spain, in Italy, the truly destructive season has driven the average price of olive oil to about 6,00€/Kg. It is to be expected though, since it appears to be the worst season in history for Italian olive oil. Specifically, there are areas in the South that production has dropped below 65% compared to previous year.

In the rest of the olive-producing world, like Greece, Tunisia and Turkey, the decline in production is estimated to 30% – 35% with prices in Greece around 3,10€/Kg for the extra virgin olive oil (which represents this year less than 20% of total olive oil production) and in Tunisia 2,75€/Kg. Similar to Spain and Italy, there appears to be the same hesitation from both the buyers and the sellers side, seemingly waiting for price developments in Spain before they react.

In conclusion, we can admit to the existence of a general stagnation in the markets which we believe will continue for several weeks to come…

Happy new year to everybody. We would like to thank you and hope you will find our reports useful throughout this year as well. Let us see how matters are developing in the beginning of 2019.

In Spain, the harvesting still hasn’t concluded. The country’s production is estimated to approximately 1.550.000 tons. Both the quantity and quality of it is expected to be fairly good, according to the producers. What is not good, is the price of the extra virgin olive oil that has remained steadily below 3€/Kg spot. Furthermore, many agricultural cooperatives and producers, Andalusian UPA included, threaten to halt the harvesting if prices do not increase above that spot.

On the other hand, in Greece, harvesting has almost finished, with few olive oil presses still operating and with the producers in despair. Production until now doesn’t exceed 180.000 tons with premium extra virgin olive oil quantities (something that Greece is known for) expected to be lower than ever.

In Italy, all olive oil production factories have closed for 2018-2019 (or more precisely, all factories that opened have closed). Admittedly, this is going to be one of the worst harvest periods that the Italian olive oil has ever seen. Total production is estimated to 190.000 tons and surely Italian standardizers will need to import large quantities to cover their customer’s demand. The problem is, this time, they will not have at their disposal the large reserves of Tunisian production, like the previous year. Tunisia is expected to produce about 160.000 tons of olive oil, a significant decline from previous year’s 280.000 tons.

Greece, that is also a very good source of high quality olive oil for Italy, has their own problems as we mentioned above. Olive oils with premium characteristics (low acidity, rich in polyphenols) are scarce and most of them will be kept to cover the demand of customers in the Greek market.

In conclusion, the fate of this year’s olive period rests in Spain’s hands. If Spanish producers and cooperatives withhold their production, then prices are expected to increase slightly, to the price range of 3,00€ – 3,10€ /Kg for the extra virgin olive oil. If however, they decide to start selling to the Italian standardizers, it is possible that prices will drop even lower than the current levels.

We estimate that prices regarding the period of January will remain stable, waiting for Spain’s harvesting to conclude. As we mentioned in our previous report, there are still large reserves from the previous year’s period, which helps keep price fluctuations minimal. Although prices remain stable for the time being, quality is a different story, hence we advise you caution when choosing which olive oil to buy since this year is going to be a challenging one quality wise.

Reaching the final line on the road to the new olive period, it is becoming apparent that this year, harvesting is going to complete much sooner than previous years. If we exclude Spain where the prolonged rainfalls have delayed the harvesting, other olive producing countries like Italy, Tunisia, Greece and Turkey will finish their harvesting quite early.

Spain seems to be the favored one this year, as Spanish production is estimated to about 1.550.000 tons featuring also good olive oil quality characteristics.

On the contrary, in Italy, things seem rather grim mainly because of the frosts but also due to the bacterium xyxella fastidiosa that causes the olive quick decline syndrome (OQDS). Total production is not expected to exceed 190.000 tons… Illustrative of the situation is an article from Italia Olivicola which literally states this season as “dramatic and one of the worst Italy has ever seen”.

Greek production has also taken a severe hit this year, both in quantity and in quality. It will come close to 185.000 tons (worse than firstly estimated hence the big revision for this season’s production).

Regarding other olive producing countries, production is estimated to 200.000 tons for Turkey, 160.000 tons for Tunisia and 110.000 tons for Morocco and Portugal.

Taking into account our previous reports, total worldwide production is expected to be 8% – 10% lower than previous year. On the other hand, according to the International Olive Council, worldwide reserves in the beginning of the olive season are approximately 672.000 tons compared to 375.000 tons of the previous year.

In conclusion, prices may show a slight upward trend until the middle of the month, when, we will have a better picture regarding Spain’s production but without large fluctuations. For the time being, we are still waiting for Spain, which indisputably will set the pace of the olive oil price trends this season.

New harvest period has started with particularly bad omens, especially for our country.

Let’s have a better look at what is happening in some of the major producing countries, starting with our own.

In Greece, the damage both in volumes and quality is excessive. This year, the olive oil production is estimated to be below 240.000 tons, a significant decline, above 31% of the previous year. To make matters worse, the prevalence of bad weather conditions, olive fruit fly and the fungus spilocaea oleaginea, is expected to take its toll on the quality of the harvest period. Specifically, for the area of Messenia, more than 60% of the production is expected to not fulfill the criteria for extra virgin olive oil and from the rest of the production that does, only 10% is expected to have high quality characteristics (very low acidity, rich in polyphenols, etc.).

Italy and Tunis are expected to follow the state of our country, with their production dropping even more (estimates bring their volumes for the new period to about 200.000 and 150.000-170.000 tons respectively).

On the other hand, in Spain, production is expected to reach 1.550.000 tons (above 22% increase from last year) confirming our previous estimates.

In conclusion, world wide olive production will remain about the same as previous year’s, mainly due to Spain’s big production increase. It is still though, too early to make any safe guesses regarding the trend that olive oil prices are going to follow. We can only say that the trend seems to be more stable and with less fluctuations than previous year’s. However, since premium olive oils are going to be scarce, we can expect a gradual onward trend. Everything will become clearer as we enter the final line for the new period. Let’s hope that the quality of the new harvest will change for the better.

The E.V.O.O. market remains quiet…

Nothing seems to be able to shake the buyers that continue to show no interest.

At this point, producers should be preparing their tanks for the new harvest, but there are still large quantities of unsold olive oil (this figure may be as high as 60.000 tons!).

So, we are facing two scenarios: The good one is that the price will plummet, in order to sell the last year’s olive oil. And the bad one is that the sellers will hold their position and inevitably adulterate the fresh olive oil, hoping for higher prices in December.

Unfortunately, we will most certainly face a mixed case. Some producers will sell cheap, but others will sit on their full tanks.

As a result, prices are expected to drop further, but not at the massively expected level.

But the buyers should not smile upon these predictions, as the market will suffer from quality degradation, due to adulteration and also due to the Bactrocera oleae (more commonly known as the olive fruit fly), which has been reported at several oil producing areas.

Oh my, we love the years that the E.V.O.O. quality is so much depending on the producers’ responsible practices!

Buyers still haven’t returned from summer vacation…

We have entered the first month of autumn and everybody is preparing for the new olive harvest period.

The E.V.O.O. market shows no signs of recovery and it seems that the pressure at prices may intensify, at least for the next couple of weeks.  and there are three factors to explain the trend:

• First, the absence of international buyers in August – nothing unusual here.
• Second, there are significant unsold reserves that still remain in the tanks from the last harvest.
• Last but not least, the estimates for the upcoming harvest are highly optimistic.

As a result, the prices have the potential to plummet, at least during September. This trend may as well continue uninterrupted, unless there are game changing events in the E.V.O.O. market.

Predictions regarding the worldwide production of the new harvest period 2018-2019, according to IOC data, show that it could very well reach the levels of 3,1 million tons.

Will those estimates come true? If they do, we are looking at a rather satisfactory harvest year, considering that Spain seems to reach an overabundant harvest.

However, it will not be as great as the last one that admittedly set new limits.

So, fingers crossed to avoid disasters from intense natural phenomena and we are up for a smooth year!