Olive Oil Monthly Report – November 2023
Spain and Italy switch places, with global production estimates down 18% from last year.
What’s happening this month?
The Spanish trade platform Poolred keeps showing a slight downward trend. Spanish Evoo average prices are now settling around 7.50 Eu/Kg, a decrease of 13 % compared to the peak of 8.45 Eu/kg in September.
The Italian monitoring agency Ismea also confirms a downtrend for Olive Oil trading prices from the main producing countries since the beginning of November:
Italy: 8.20 Eu/Kg → down 2%
Greece: 7.40 Eu/Kg → down 4.5 %
Tunisia: 7.93 Eu/Kg → – down 3.6 %
The data reported from Poolred, Ismea, and similar organizations are ideal tools to capture general trends. However, these agencies don’t consider the value associated with different quality grades, pesticide residuals, and profiles. Each element constitutes a crucial factor when sourcing Olive Oil and substantially impacts the actual cost of each batch released into the market.
Our sourcing team is observing trades for high-quality, export-grade Extra Virgin Olive Oil from Spain at 8.50 Eu/Kg, a value in line with the previous months, and Italian Evoo trading at a lower level, around 8.20 Eu/Kg.
In an unprecedented historical phase, reversing the traditional balance between the two origins, the demand for Italian Evoo is skyrocketing. Despite the new volumes available from the ongoing harvest, Spanish producers seem instead interested in keeping the value of their crop substantially high for the foreseeable future.
Global picture and trends
The harvest is in full swing in the Mediterranean area, with discording projections on the final volumes that each country will be able to release into the market this year. A deciding factor will be the yield values, representing the average amount of oil the mills can extract from the fresh olives.
The Olive Oil Times, an independent media agency and popular source of information about olive oil in the USA, estimates a global production of around 2.4 million Tons. Should this number be confirmed, the worldwide production would decrease by 18% compared to the previous campaign in 22/23 (2.94 million Tons), which has already been one of the lowest results since 2016/17.
The countries part of the European Community are projecting to deliver a total of 1.5 million Tons of Olive Oil, equivalent to a 9% increase compared to the previous harvest.
The sum of the current data from the seven main production countries (Spain, Italy, Tunisia, Greece, Turkey, Morocco, and Portugal) places the Mediterranean region, responsible for approximately 80% of the global Olive Oil production, at 2.0 million Tons of Olive Oil, a value equal to a 7% decrease compared to 22/23 and e 23 % drop compared to the average of the last four crops.
Spain, as the leading country for the whole sector, heavily impacts the global Olive Oi numbers and market. In Andalusia, the most significant production area for Olive Oil worldwide, the recent autumn rain only helped the trees survive after the hot temperatures and the lack of irrigation during the last 15 months. The water reservoirs available for farmers are only at 20% capacity, in line with the previous year but still 50% below the average.
According to the Agriculture Department of the Government of Andalusia, this region will produce only 550.600 Tons of olive oil, up 7% vs last year but still 40% below historical averages.
Harvest Projections by Country
Spanish producers expect a slight volume increase, thanks to improved climate conditions during Autumn.
Estimates: 765,362 Tons in 23/24 vs 664,033 Tons in 22/23
→ Up 15% compared to last year
→ Down 35% compared to the last four crops’ average
The Italian regions of Puglia, Calabria, and Sicily report good quality and excellent yields.
Estimates: 300,000 Tons in 23/24 vs 240,000 Tons in 22/23
→ Up 23%
→ Down 4% compared to the last four crops’ average
Tunisian farmers benefited from the long-awaited rain in Autumn and improved yields thanks to investments in mills and harvesting technology.
Estimates: 220,000 Tons in 23/24 vs 180,000 Tons in 22/23
→ Up 22%
→ Down 13% compared to the last four crops’ average
Greece volumes reflect the natural cycle of the olive trees, resting from last year’s record production and an arid and hot summer.
Estimates: 200,000 Tons in 23/24 vs 330,000 Tons in 22/23
→ Down 40%
→ Down 28% compared to the last four crops’ average
Last year’s exceptional crop in Turkey is affecting the current forecast, along with the particularly rigid and wet spring and the unfortunate earthquake in February, damaging the whole food infrastructure.
Estimates: 180,000 Tons in 23/24 vs 421,000 Tons in 22/23
→ Down 57%
→ Down 33% compared to the last four crops’ average
Given the current high market value for Olive Oil, Moroccan producers will direct some of the fruit traditionally allocated to table olive production to mills, increasing their capacity.
Estimates: 171,600 Tons in 23/24 vs 156,000 Tons in 22/23
→ Up 10%
→ Up 4% compared to the last four crops’ average
For years, Portugal has invested in increasing the surface dedicated to super-high intensive olive farming. After a strong year, the fast-growing volumes available will compensate for the natural resting cycle of the trees.
Estimates: 140,000 Tons in 23/24 vs 125,000 Tons in 22/23
→ Up 10%
→ Up 1 % compared to the last four crops’ average
Export Ban for Morocco and Turkey
The lack of volumes available from Spain sharply increased the demand for Olive Oil from other countries by European and International traders.
To mitigate the effects on cost, driven by the higher demand from foreign markets, the Turkish and Moroccan governments decided to halt the export of bulk Olive Oil to protect local consumption and maintain the cost of this staple ingredient accessible to their citizens.
With the new harvest ongoing and new volumes entering the market from Europe, it is to be seen if the two countries will decide to re-open the markets or will hold their position, risking missing the opportunity to create stable and profitable trade relationships for the years to come.
Final Thoughts
With the information available today, the climatic conditions and the forecasts for global production bring little hope that the prices for the campaign 23/24 will go in a much different direction than the previous year.
The market is still tense, and even though price increases and demand have slowed, we can assume that even a tiny event or disruptive factor will immediately affect quotations and trade. Consumer demand, export bans, political instability, and an increasingly unpredictable climate could still create snowball effects for the industry.
Our sourcing experts expect more market and demand fluctuations between now and the end of 2024 and recommend avoiding locking long-term contracts and price strategies, at least for the first half of 2024.
Don’t hesitate to reach out to talk with our team of experts and share any question or comment you may have.
