Will it be a Merry Christmas / Happy Holidays?

By Don Griego on

As time marches on, the new crop is not taking shape as we planned or hoped. It certainly is becoming worrisome to understand IF the market will ever develop OR just be a constant journey of short supply and strong demand. Normal years, when carry over is fixed and sufficient / crop is considered well in Spain, some softness has usually occurred BEFORE Christmas. We are not any closer to that scenario. Rain, low yield has made supply cumbersome and added the possibility of the crop in Spain being shorter than expected. That coupled with the poor crops in Tunisia, Italy and Greece has made a very strong demand in Spain. Those producing countries who depend at least for supply in beginning of the crop cycle have made whatever raw material available a HOT commodity. Prices do not have a chance to cool and supply has not caught up with demand. The official export figures in Spain was about 73,000 tons, normal exports usually run 50/55 thousand tons. Pricing will remain an issue until supply availability over takes demand. That may have more to do with the weather affecting supply than anything else at this point.

Some interesting facts and figures on past production details:

1. November 2016 harvest – 86,155 metric tons production.

2. November 2012 harvest – 87,700 metric tons production.

3. Lowest production in 2016 in past 7 years.

4. Estimates production left # 1,253,845 metric tons left to harvest (6.4% harvested).

Tunisia is sort of in the same pattern with one big difference. The crop is shorter than last year which was not great to begin the conversation. Rain and yield has also delayed any thought of a softer price possibility at this time. Demand and tenders have been quite strong. Tenders being the certification to import into the EU without duty. These tenders require a 200 EURO per ton deposit. Buyers need product and do not want to lose their tender deposit.

Turkey wants to be a player this season, however to use a sports analogy, they have been out of the game for so long, the rules have changed somewhat and due to the sharp demand they have been sellers to countries who have less QA/QC requirements and the added bonus of quick payment turn around. This has certainly hampered our ability to negotiate deals at the right quality parameters we need and desire. Somewhat frustrating to both AMD and our traditional suppliers. Turkish new crop has been delayed because of rain as well. The old crop is a little like FINDING WALDO. No one is exactly sure who has the carry over oil AND what condition the oil quality is.

Stay Tuned, it will be an interesting 30 days. Please feel free to call office and get up to the moment updates on situations in the exporting countries.

Mission Statement

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

Well the voters have spoken and we have a new party and new type of politician in the White House for the next 4 years. This development has been very good for the stock market- reaching new high just recently and maintaining that strength. The main stream media news has been pontificating on the cabinet picks. The president elect has continued tweeting his messages to the American public directly. We are in a new reality in the way our government will be run. I, for one, have lost interest in trying to determine if this will be good or bad. At least until these decisions affect the people in some meaningful way. If the new administration can deliver on the promises they made to their voters who elected him, change is going to occur. My only concern is that if promises are not kept, what does the voting public do until the next election cycle. These issues will play out soon enough. Plenty of promises to keep Congress busy trying to enact. A majority in all three branches. Should be very interesting and new era for the American people.

In Europe, economically things seem to be on stable side. The central bank kept interest rates as they were, and had very preliminary discussions on when they might actually raise them. The European economy is not a juggernaut however far from the critical state it was in.

California Olive Oil Commission / Australian Olive Oil Association

Well the NAOOA made a bit of a splash with the filing of the lawsuit against Doctor Oz. Although we cannot comment on the case itself. It just became time for the conversation to get back to a fact based discussion on the real issues at hand. Statements made on the show of 80% of the olive oil in the market is adulterated, and having a competitor’s expert not challenging that statement on the show made the situation — too much not to address.

There are certainly many issues and topics where the domestic industry and the import industry can have common ground to grow the category. It is our hope that the domestic players are receptive to having these conversations; after all production this year will be at an all-time high (13,000 tons), retail market share is up substantially, having the need to supplement previous production with IMPORT quantities from Chile and Argentina and Australia.

It is also interesting to note that some of the major domestic brands are owned and operated by international companies from Spain and Australia.
We look forward to constructive conversations to grow the category for all to benefit from. A research and promotion order for ALL olive oil products would greatly benefit the entire industry, and significantly enhance olive oil in the US to all consumers.

Costing by Product – Buying Recommendation

EXTRA VIRGIN:
We are basically STUCK in the same space we were in last newsletter. The only difference to get prompt shipment one will have to pay more. There is concern this trend may continue for some time from the Mediterranean. Some might conclude the market may not soften at all. One has to look on a case by case basis, HOWEVER, coverage until the end of January is recommended.

REFINED / PURE:
Similar to EV, refined in Spain is still at price levels not seen in recent years. The price trend is following EV. There is not much one can do, but bite the bullet on costs and get coverage until at least the end of January – maybe mid-February.

Turkey may give us some relief on refined. For east coast, that relief may not be until the warmer weather.

POMACE:
Severe raw material shortages have made pomace almost unobtainable. Prices we have not seen – well almost ever. This drastic costing model will NOT decline until new crop raw material in available and maybe a tad beyond.

***** 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

SPOT:   1.0417

OPEN:  1.0916 on November 10th

HIGH:  1.0956 on November 10th

LOW:  1.0417 on December 15th