Decision Time 2016 – NO not that decision
It has been a little while since last newsletter. I apologize, we hope to make it up to you with some real time, up to date information that we have gathered over the past 45 days or so.
Output in Spain in September was lower than the average for the year -however, still a good number for September. 97,000 tons were either consumed or exported out of Spain, leaving estimates around 230,000 tons as the carry over number. We have learned that RAINS (good) have come to the growing region. This will delay the crop and help some towards a better yield for this year crop and help in the trees’ recovery once harvested. IF we get more rains shortly after the trees are harvested, it will be a good sign for the following crop. This is important to keep in mind for later in this conversation. Of course, not all things are rosy for the olive oil crop. Italy will be severely down, Greece will have less than last year, as will Tunisia. Turkey looks like it will have exportable quantities, which might help refined prices especially early in the crop year. Spain ministry opined that the official crop figures will be 1,380,000. The worldwide crop will be a tad short of the 3 million tons.
The major decision time is delayed due to the crop being pushed back due to late blossom and the current rains. So oil is coming – more specialty early Arbequina. There is not a significant crush going on at present. The bad news is that most buyers especially in Europe do not have a position or inventory as they were waiting for the predictable lower priced new crop offering. So it doubtful we will see much of a decline off the current price levels that have been here since July or even before. When will possible lower prices come? That is indeed the 64,000 dollar question. My best guess is not until after Christmas holidays. New crop oil will not make its way here in any significant way until end of January. We will probably not have new pricing on the new crop until mid to end December.
We are here if you want some background information on how to proceed in your individual case.
PRICING FOR 2017
This will probably be one of the last newsletters on this topic. The current situation only reinforces my original thought that giving out prices – even before TODAY – is a gamble on both parties’ part. Someone will probably win BIG or lose BIG. Not sure if this is the most efficient or economical way to get your requirements covered. Building a communicative relationship with current information is the BEST way to proceed. A supplier having a good idea of their costs is crucial to performance and take the GUESS WORK out of the equation.
At AMD Oil Sales LLC, we take pride in being a “buyer’s sanctuary.” From start to finish AMD ensures that the needs of our customer are not just met, but fully recognized and exceeded in a seamless fashion.
AMD provides a stress-free environment for quick and efficient communication – all supported by proven supply chain integrity and the latest relevant market information. With that knowledge, AMD is able to accurately forecast and assist our customers in making prudent and educated purchase decisions. To ensure this reputable experience even further, AMD is also backed by a certification from the Safe Quality Foods Program (SQF).
Ultimately, customer satisfaction is paramount. The entire AMD group is fully committed to elevating the distribution of bulk oils across the entire process.
WORLDWIDE FINANCIAL CRISIS
Dollar has gotten stronger since our last newsletter. That has allowed the firmness of the market not to be as harsh as it might have been. Europe seems to be quiet and stable on the economic front. There are obvious tensions with Russia and some Far East Nations. Nothing of the magnitude of the financial crisis from 2007/2008. Other than that, the WORLD is waiting for our Presidential Elections results. I can tell you definitely that suppliers I have visited with and known for many years, are EXTREMELY worried about this election.
CALIFORNIA OLIVE OIL COMMISSION / AUSTRALIAN OLIVE OIL ASSOCIATION
As we look toward our option on developing a Research and Promotion Order – we are looking for strategies that allow the NAOOA and the California Producers to work together on this project that would greatly benefit all olive oil sellers.
COSTING BY PRODUCT – BUYING RECOMMENDATION
Market is taking shape. Albeit late, the prompt shipment question is an easy one. If you are in need, you are going to pay the higher prices that have been present since the summer. If however, you can wait until January arrival (late December) shipment, you may be able to take advantage of a slight softening of the market. The softening will occur when the harvest volumes start coming, and substantially exceed the demand by buyers. We can tell you without hesitation that buyers worldwide are short on inventory. If they see the slightest decline in price, they will take positions, causing the momentary softening in the market to disappear. Look for information on WHEN the harvest is in FULL gear.
REFINED / PURE:
Turkey looks like they will have competitive prices at least to start new crop shipments. There are some different parameters on Turkish raw material compared to Spanish. In most cases the differential is immaterial, in other application – not so much. Be sure to have this conversation with your seller. There are some savings for November shipment – December arrival. We are well positioned with our office in Turkey to get – validate and secure shipments.
Another incorrect assessment last month – we did not foresee the large increase in crude raw material. We completely misread the supply situation. Market for prompt shipment has gone up .10 cents per pound on refined pomace oil. There is not much you can do if you need, except swallow hard. The question is how long you have to wait until the raw material becomes more readily available. The delay in the harvest is exacerbating the situation.
***** 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
Since last report
HIGH: 1.113 ** NOTE on November 6th
LOW: 1.080 ** November 1st