Lull in the Action
Market has slowed to a crawl. Crop is all but finished in Spain. The final figure for total production looks like 1.385 Million Tons, with yields being very good as compared to previous years. We can state that the quality on EV this year is much better than last year’s campaign.
Prices are flat and steady, not too much being offered and/or confirmed. There is a pensiveness to the market. Rumors are that new crop will not be as good as this season. There is some science to it, I think however a bit premature to make decisions based on next crop. It is leading to the doubt hanging over the market. The other subject which is always Omni-present is RAIN, or the lack of it. Currently they are getting a decent amount in important growing areas. Of course, it will be either not enough or too much.
At some point, market will take its final shape. Simple economics will take over, hard supply vs. demand. Tunisia has oil, however is content in selling into Italy with their large quota for Duty free entry into the EU. This without a doubt (Tunisian) represents the largest one year drop of exports to the US from one year to the next; at least in my memory. (Which is not as good as it used to be). The rain will or will not be enough to support proper hydration of the new blossom/crop. This will be an ongoing discussion as Spain does not usually get much if any rain over the late spring and through summer. The wild card at least for refined oil will be Turkey. Oil is slowly making its way out of Syria which usually finds its way into Turkish and Tunisia producers. Add that onto the crop from 2014/2015 which was significant and this year’s crop which was more than their declining domestic production, leads me to believe that some oil will come out of Turkey – refined of course. That alone may keep Spain prices on refined at levels we see today. Will it lead to a decline in prices? Not sure or willing to commit to lower prices at this time.
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Worldwide Financial Crisis
California Olive Oil Commission / Australian Olive Oil Association
Costing by Product – Buying Recommendation
Same recommendation as last newsletter. Keep your eyes and ears open for moves in the pricing on a EURO basis. What you do with the dollar/Euro is a whole other conversation.
REFINED / PURE:
Same conversation on refined as last month, although we think that refined may be more available than known last month. This has a better chance of remaining flat or declining than EV. 60 day coverage is what we would recommend.
POMACE: Pricing continues to rise which is counter to my belief in supply and demand. The only explanation was that the previous levels were too far away from refined costs and demand picked up. 60 day coverage seems appropriate.
***** All these suggestions are based on a stable Euro**** we have instruments in place to keep the currency stable with the flexibility to take advantage of a stronger dollar.
Currency Facts – Euro Update
The low for the past 30 days were almost higher than previous 30 day HIGH. Perplexing to say the least.