Weekly Olive Oil Market Updates
The European olive oil market has encountered a difficult crop season with limited yields, leading to a volatile situation. Prices remain high, and global consumption is substantial. This week's insights are drawn primarily from transactional data on Wikifarmer Marketplace and expert analysis. Additionally, we've collected data from the Union of Olive Oil-Producing Municipalities of Crete, PoolRed, and Ismea Mercati.
The Spanish olive oil market is currently stagnant, with packers anticipating a price drop starting in November when the new crop begins. As a result, they are refraining from making long-term purchases, causing anxiety among farmers due to the lack of large-scale buying. Following last month's high consumption volumes, a decrease is expected in the next report. Although packers continue to purchase olive oil, transactional activity remains low, and prices are still high.
In Greece, rising prices have made Greek olive oil less competitive in the market. According to our experts, Italy is now favoring Spanish offers over Greek ones. The lack of demand may lead farmers to lower their expectations, as they have been hoping to sell at higher prices for the past months. The low stock in the market is currently being used primarily for national transactions. Despite these challenges, the Greek market anticipates a better crop next year with increased yields.
The outlook for the olive oil market leading up to the new harvest in late October appears discouraging, with major producing countries facing significant challenges in meeting export and domestic consumption demands. Spanish producers, who currently hold the largest volume of olive oil, are particularly affected. With only 806,000 tons available worldwide until the end of September and global consumption needing to be restricted to 161,200 tons per month, Spanish stocks of 398,000 tons for producers and 176,936 tons for packaging companies are critically low. The situation is exacerbated by the unlikelihood of importing additional oil from other countries, as Turkey, which has significant stocks, has closed its borders to bulk shipments.
Recent data from the Food Information and Control Agency highlights a 17% increase in exports and a 20.7% rise in domestic market consumption in April, reaching 69,000 tons and 35,000 tons, respectively. However, the demand for extra virgin olive oil, estimated at 120,000 tons per month worldwide, poses a significant challenge since there are not enough stocks to meet this requirement. The need for 600,000 to 700,000 tons of high-quality olive oil from May to September underscores the severity of the supply shortfall, risking potential shortages and market instability until the new harvest begins.
Does Spanish olive oil expand to the Chinese market?
As evidenced by our inquiries, European olive oil enjoys widespread popularity across the globe. Spanish olive oil producers are actively targeting the Chinese market, viewing it as a strategic opportunity amidst historically high prices and evolving consumer habits in the European Union. With rising incomes and a growing interest in healthy eating among the Chinese population, demand for olive oil has surged in recent years. Spanish exports of virgin and extra virgin olive oil to China have witnessed a substantial increase, reflecting the country's emergence as a key market for olive oil producers. Efforts to capitalize on this trend include promotional events and tastings organized by industry associations, aimed at building brand awareness and establishing relationships with distributors and importers in China.
However, despite the growing market potential, challenges remain for olive oil sellers in China. Chinese consumers often view olive oil as a specialty product or gift rather than a kitchen staple, and there is limited awareness about different olive oil grades. Additionally, high production costs in China make imports more competitive, giving Spanish and other E.U. producers a pricing advantage. While demand is concentrated in major metropolitan areas like Beijing, Shanghai, and Guangzhou, changing consumer preferences, such as a shift towards takeaway food and rising youth unemployment, may present short-term challenges for Spanish exporters.
Wikifarmer negotiates with several suppliers to secure a steady supply of Olive oil at reasonable prices. Our team can help you with price negotiation, pay with credit terms, and arrange logistics and transportation. We also implement strict Quality Assurance procedures, making sure that producers provide us with all certificates that prove their claims about their products, and that all relevant analyses take place.
Our contribution is not constrained just to the facilitation of value optimization for the various market players. We also invest a lot in making sure that our highly-valued partners, either from the supply or from the demand side, keep up with the latest developments in their fields.
This is why we have created Wikifarmer Academy, in order to offer affordable educational courses to all. The Wikifarmer Academy is an online school that aims to provide complete educational courses that will empower you and help you cultivate more efficiently and sustainably. In case you are interested in learning more, check our new course "Wikifarmer Expert in Sustainable Olive Oil Production, Quality, and Economics" here.