April Fool – Supplier or Importer on wrong end of the Prank?
Have to apologize for not getting a newsletter out last month (February). The market has been basically stuck, since our last correspondence. That was the good news of the crop, crop figures are out, which can be seen as bad news. But let’s look inside the numbers a little closer.
2011/2012 2012/2013 (in thousand tons)
Production 1570k 600k
Consumption (monthly) 50 k 41 k
Exports 70 k 50 k
Imports (Oct-Feb) 26 k 41 k
Carry Over 475 k 700 k
Stocks available end Feb. 1,472 k 855 k
You can go through the numbers and make some conclusions based on the numbers above, and you can go further and look at historic consumption/exports to determine the direction of the market pricing. Of course, there are several factors that no one can forecast and only can speculate on. We would be glad to have these discussions with you.
But these numbers do give us insight on where the market might be going, and how to react to future market conditions. There are some outcomes, you will not have much opportunity to control, and just get caught up in the flow of prices. However, there are things that you can control and plan for. Those who have followed our recommendations are covered until the end of August, without having to take it all into inventory in short course.
There are several factors that are important to understand and be aware of. Many scenarios are possible and it is important you are not taken by surprise when the market starts moving. Having a good grasp of possible market moves will enable you to avoid taking a “knee jerk” decision, which would hurt your position.
Marketing Order – ITC Investigation/UPDATE
The Senate is trying to get to the Farm Bill in April. That is the hope. In the House, nothing really concrete, with the turnover on the AG committee it is hard to get a clear understanding of how/when to address the Farm Bill.
The marketing order which at the ITC opening meeting was denied existing is starting to make its rounds with legislators. It is my opinion, and my opinion only, that if the 8e is not attached to a piece of legislation, the Californian and Australian sponsors of the proposed marketing order will not even pursue getting a MO. Certainly not until the ITC Investigation is finished and its conclusions are published. That report will be published in August.
The ITC Investigation continues its fact finding, asking pertinent questions, delving into important issues on olive oil production, storage, logistics and of course quality control. The committee is very serious and has taken great lengths and depth to explore the complexity of the issue. Time will tell, but as they continue to ask for participation we will continue to give truthful information for them to study, we are cautiously optimistic on the committee’s finding.
Worldwide Financial Crisis
Well, two months have passed since we last reviewed. Europe is pretty much under control, except for Cyprus. Unfortunately nothing has changed in Washington DC. It continues to be an embarrassment what is going on there. The Sequester had to be implemented because we do not have any adults in the room who could figure out a way to get the same amount of spending cuts (which I think are just really – no increases to current spending) in a more intelligent and thoughtful way. Mind boggling.
Costing by Product – Buying Recommendation
EXTRA VIRGIN – You need to continue to expand your position as your suppliers will allow. Currently, you are now in position to do just that. Supplies are somewhat limited. I would expect another increase in EV prices shortly. The real defining moment will be when EV from anywhere but Spain is dried up. That is the $ 64,000 question. If you know the answer to that, you will be able to plan the rest of your EV requirements for the balance of crop year until new crop.
PURE/REFINED – We recommend you continue to add to your positions, market is stable, and you can almost say a “dip” is occurring. As stated, you need to be buying at the “dips”. When EV prices start to increase, refined will follow.
POMACE – There is upward pressure here. Continue to expand your position as best you can. There is little chance the price will go down, so no harm at extending your position as far out as your suppliers will allow.
Currency Facts – U.S. Dollar vs. Euro
January/February trend of a stronger dollar continues, with dollar levels being stronger than the low in January. We can only hope that the politicians in DC can bring some certainty to the budget talks and enact some real change in spending and the tax laws.
February March Feb/March
AVERAGE 1.3385 1.2977 1.31709
HIGH 1.3711 1.316 1.3711
LOW 1.3018 1.278 1.2725
Donald Griego – AMD Oil Sales LLC