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European Olive Oil Market Report - September 2024
Main Market Figures - Spain
As we mentioned in our previous post, AICA data released the monthly updates for the Spanish olive oil market last Friday. This publication was much anticipated since the scarcity of olive oil has created great tension in the industry. With the next crop just one month away, the market is at a crucial point where there might be a complete unavailability of olive oil.
Weather Conditions
Spain is currently enjoying typical autumn weather characterized by ample rainfall, which is promoting the development of olive fruits and enhancing oil yields in anticipation of the main harvest season from November to January. The expected rainfall in October and November is set to benefit both this year's and next year's crops, offering a positive outlook for production.
However, an excess of rainfall could lead to delays in the harvest as producers strive to optimize their yields. As a result, there is a strong likelihood that olive oil availability in Q4 of 2024 will be severely constrained, creating further challenges for the market.
The current state of water reservoirs in Spain is showcased in detail in the following graph:
Outputs
This month experienced notable growth in olive oil outputs, reaching 86,847 tons. This outcome was unexpected, particularly given the relative calm in transactions during September. The outputs represent a remarkable 23% increase compared to the previous month, elevating the average output for 2024 to 78,192 tons. This surge in outputs reflects a dynamic shift in the market, highlighting the resilience and adaptability of consumers and olive oil companies amidst challenging conditions.
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Our View
Every September, the regional government of Andalucía releases its forecast for the olive oil sector, as the region is responsible for 80% of Spain's national production. This year's forecast estimates yields of 1,021,000 tons for Andalucía, contributing to a total forecast of approximately 1,300,000 tons for Spain as a whole.
This forecast appears optimistic for Spain and other producing countries, and the total global availability is projected to reach 2.7 million tons. The current short carryover is creating a tense market environment, with buyers exercising caution in their purchasing decisions until the next crop is harvested.
Some farmers have already begun offering lower future prices for November and December to attract buyers. Meanwhile, packers are adopting a conservative approach, purchasing only the necessary replenishment volumes as they anticipate a price decrease starting in November.
Overall, there is significant concern regarding the expected rainfall, as excessive precipitation could delay harvesting. Such delays would further reduce availability during critical periods in Q4, heightening the market's volatility and uncertainty.
Main Developments in Greece
In Greece, estimates indicate that this season's (2024/2025) olive oil production will reach between 220,000 and 230,000 tons, representing an approximate 30% increase in volumes compared to previous years.
The harvest of the Koroneiki variety has already begun in key production areas, including Crete, Messinia, and Lakonia. Mills are currently processing Early Harvest Extra Virgin Olive Oil and Organic Extra Virgin Olive Oil. As the harvest progresses over the coming months, prices are expected to gradually decrease, reflecting the increased supply.
Main developments in Italy
The olive oil campaign in Italy is expected to be limited this year, with high initial purchase prices for olives. Yields are low at the moment but are anticipated to improve in the coming weeks. The harvest is projected to gain momentum in early November. Prices remain elevated, hovering around €9 per kg; however, they may soon align with the recent decline in Spanish olive oil prices.
The olive oil market remains highly volatile as it navigates challenges such as weather variability, stock constraints, and fluctuating prices. While Spain and Greece show promising signs of increased production, concerns over rainfall and delayed harvests could significantly impact availability in the coming months. Italy's limited campaign and elevated prices further contribute to the market's uncertainty. As the harvest season progresses, the industry will closely monitor these developments with cautious optimism for improved yields and market stability.
Main developments in Italy
