European Olive Oil Market Report - November 2024
The harvesting season for the new olive oil crop has begun, with Spain and Italy producing limited volumes. However, the new supply is driving prices downwards, contrasting with the Greek market, where producers have delayed extensive harvesting due to a lack of rainfall, keeping the market stable. This month’s data from the AICA report is highly anticipated as olive oil stakeholders closely monitor the situation, hoping this crop will help mitigate the challenges of the previous campaign.
Weather Conditions
In October, Spanish olive groves benefited from abundant rainfall, which improved the oil yields of the olives. Notably, water reservoirs in the Andalusia region increased by 15.28%, reaching 33.74% of their capacity. However, the rainfall caused some delays in harvesting, which contributed to the limited production observed in the previous month. The timing of the rains was advantageous, as the peak harvesting months are approaching when substantial rainfall could be even more beneficial. Looking ahead to November, forecasts of continued wet weather are expected to have a positive impact on the upcoming crop.
The current state of water reservoirs in Spain is showcased in detail in the following graph:
Outputs
In October, total production for the new olive oil crop reached 35,989 tons, bringing the current total stock to 138,267 tons, which includes volumes from previous crops. Specifically, packing houses hold 85,345 tons, while producers have 53,354 tons. Outputs remain high, with both the national market and exports reaching 83,809 tons, a slight decrease compared to last month.
Our View
Recent rains and the start of the olive harvest have strengthened optimism for the new crop, with Portuguese and Spanish farmers now harvesting at a rapid pace. This increase in activity has boosted demand, especially for mid-November and December deliveries, and initial offers are already showing lower prices than those seen in October. Despite high demand, packers are looking to secure the lowest possible prices before replenishing their inventories, keeping pressure on the market.
In a significant development, Turkey has lifted its ban on bulk olive oil exports, increasing short-term availability and potentially adding competitive pressure to the market. However, industry concerns remain over potential U.S. tariffs, which could disrupt export dynamics. Consumption remains strong even with elevated prices, and Spain continues to lead with over 80,000 tons of output. With the addition of approximately 15,000 tons of imports, Spanish trading volumes have reached an estimated 95,000–100,000 tons.
Logistical challenges, including storms along Spain’s eastern coast from Valencia to Barcelona, have caused delays in transporting goods to Italy. The Italian market has already responded to broader market trends with a noticeable price drop, which is expected to persist as prices in Spain also stabilize. Even Greece has followed suit, aligning with international price levels as pressure mounts across all major markets.
Meanwhile, Tunisia is capitalizing on favorable current prices, aggressively selling at rates below those in Portugal and Spain in anticipation of a potential decline. Continued rainfall expected throughout November could impact the olive oil campaign, adding an element of uncertainty for producers and packers as they navigate the peak of the season.
In Greece, the lack of rain in October prompted many producers to delay harvesting, as a significant portion of olive trees are rainfed. This drought period affected the oil concentration in olives, as the tree relies on the fruit's oils for sustenance. Consequently, the limited quantities—already lower than in previous seasons—kept prices higher (~7€/kg) than those of Spanish and Italian olive oils. Coupled with stable demand, this resulted in a relatively stable market.
However, significant and beneficial rainfalls over the past week are expected to intensify harvesting efforts, leading to increased production volumes. As a result, market prices are anticipated to decline significantly, aligning with the trends observed in the Italian and Spanish markets.
In conclusion, the European olive oil market is experiencing significant shifts as new harvests begin. Spain and Italy have seen a price decline due to initial harvest outputs, while Greece's delayed harvest has maintained price stability due to recent drought conditions. Turkey’s lifted export ban and Tunisia's proactive pricing strategies are expected to further shape market dynamics. As demand remains steady, stakeholders will be closely monitoring weather patterns and international trade factors, such as potential U.S. tariffs, which may impact the coming months. The anticipation of new data from AICA will provide further clarity on how this season's production will influence overall market stability and prices.