Olive Oil Market Digest w23

Weekly Olive Oil Market Updates

Monthly Movements in Spain

As we approach summer, high temperatures might further stress olive crops, which have already endured challenging conditions for the past two years. Although prices are generally recovering, the issue of olive oil storage is becoming more prominent. To better understand this week's market trends, our field experts and Wikifarmer transactions, along with the reliable sources of Union of Olive Oil-Producing Municipalities of Crete, PoolRed, and Ismea Mercati, have provided valuable insights.

The Spanish market remains relatively quiet due to low availability and high prices, causing concerns. AICA data, set to be released next week, will shed more light on the situation. Experts report that the lack of rain and high temperatures over the past month, combined with last year's drought, have stressed the olive groves. Farmers highlight that with exhausted olive trees and an upcoming hot summer, crop yields may fall short of expectations.

There is a significant shortage of good quality extra virgin olive oil in Europe, driving prices up to meet demand based on available stocks. In this current market situation, operations are limited. Packers are hesitant to make large purchases, and farmers are looking for opportunities to sell their remaining stock. The shortage extends to virgin olive oil as well, resulting in insufficient stock to meet both national and export consumption levels.

Italian olive oil is also in short supply, prompting national companies to seek lower-priced oil from Spain. Tension surrounds pomace olive oil due to its very low availability. Consequently, oil blends are becoming more popular and are expected to play a significant role in the market. Olive oil from Tunisia is not much cheaper than Spanish oil, and Turkey will not lift the trade embargo on bulk olive oil until the next season. In Greece, market activity remains subdued as high prices deter buyers. Producers are still aiming to sell at higher prices, with Crete holding the highest prices in the country.

Regarding exports of European olive oil, in the first half of the 2023/24 campaign, they decreased by 12.8%, totaling 292,882 tons, according to the European Commission. The US remains the top destination with 115,306 tons, a 2.1% decline. Other vital markets experienced significant drops: Brazil (-14%), the UK (-1.7%), Japan (-34%), Canada (-7.8%), Australia (-22.8%), and China (-59.8%). Conversely, EU olive oil imports from third countries increased by 28.8%, reaching 102,573 tons between October 2023 and March 2024 with the main sources included Tunisia (59,633 tons, -0.5%), Türkiye (13,283 tons, +35.1%), Argentina (7,143 tons, +292.5%), Syria (6,960 tons, +150.9%), Egypt (4,588 tons, significantly up from 414 tons), Morocco (3,386 tons, +82%), and Peru (1,012 tons, +0.6%).

Is olive oil losing ground to its competitors?

The olive oil sector has been under pressure for the past two harvests, facing production limitations, scarcity, and high prices. Despite these challenges, consumers continue to seek out olive oil due to its health benefits. However, not everyone can afford it, leading many people to turn to alternative vegetable oils like sunflower and rapeseed oil.

Despite its challenges, olive oil isn’t at the center of a geopolitical conflict, unlike sunflower oil. Ukrainian sunflower oil production plummeted in 2022 when the conflict began, with ongoing attacks and potential EU sanctions in response that might lead to further supply shortages of sunflower oil. European Union is planning to impose tariffs on grain imports, including sunflower meal from Russia and Belarus, that could also affect the market.

However, it has been noted that the bulk cost of sunflower oil is actually lower than before the Ukraine war. Russia is projected to produce 6.8 million tonnes of sunflower oil, a 21.6% increase over its five-year average production. Even though India is the primary consumer of the sunflower oil produced, it still impacts global oil prices. It has been reported that supermarkets, having seen that shoppers will reluctantly pay higher prices, may be hesitant to reduce them.

Olive oil sales may have dropped by 40% over the past two years as consumers shift to other vegetable oils. However, the upcoming crop season could yield better results. Stakeholders will need significant effort and patience to restore olive oil's standing in the fats and oils market. Wikifarmer offers numerous options to help buyers find top-quality olive oil at competitive prices.

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.