Happy New Year – Almost

By Don Griego on

Crop is well underway in producing countries. Tunisia and Turkey have been very aggressive in trying to move quantity. Although keeping a constant differential between Spain and the current levels being offered. More so in Tunisia, who has the EU as an important trading partner. In Turkey, more supply and demand effect has been the rule of the selling. Both producers are going to have large exportable quantities, and monetizing the crop will be interesting to watch. It’s obvious in Tunisia they have benefited from closely mimicking what Spain is quoting. Additionally, Tunisia has been helped by Spain’s stubborn or bullish strategy that there will NOT be enough world-wide supply versus worldwide demand requirements.

Let’ s look at that more carefully with some bullet points.

1. Spain is desperately in need of water in a good amount of growing areas. The incoming rain will have to be enough for the trees to recover. It will have to be plentiful to refill reservoirs and streams/rivers.

2. It is true that a lot of the new plantation in Spain has drip irrigation.

3. Tunisia is about 40-50 % completed, they have a long way to go. They have enjoyed some very good historical prices for what has been sold to this point.

4. Turkey will be harvesting well into March, some say April, not sure about that. Unlike Tunisia, Turkey does not have the QUOTA with the EU. Of course, importers in the EU of the olive oil can use TPA to import into Europe and export on out with the TPA.

5. They have been having some rain in growing areas in Spain. Of course, not enough.

6. World Wide Demand fell in 2017 – we have not been able to find a concrete figure – even a decline of 5 % on 3-million-ton crop is 150k tons. Not catastrophic, but more than a month OUT PUT in Spain.

7. Spain is buying good quantities in Turkey and Tunisia and stock piling inventory while keeping the market stable. How long they can do this, remains to be seen.

Overall – chaotic market. A good percentage of the oil being sold is NOT going to be consumed and will have to be resold at a later date. Market prices are ebbing and flowing; it seems with the wind. Large purchases are giving producers pause, yet the oil keeps flowing in on a good pace. Factor in – prices at these levels – farmers are making out quite well.



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Well, finally a piece of legislation has passed. A humongous tax cut. As we try to unravel what it means to each family here in the US., the economy (GDP) did not get to 3 % as anticipated, however still growing at a good level. The tax cuts have led to be quick bonus payouts by some companies. Europe is not reporting bad news, which in itself is good news. Overall compared to several years ago, things are progressing in the right direction it seems.  OH WAIT, the EURO… more on that below.



We are in the process of getting to know each other a little bit. An Attitude and Usage Study is under discussion. Some members met before the Fancy Food Show to share a bite to eat. Baby steps – direct conversations are always a good way to try and modify older perceptions / try to build new concepts that together will build the category.



A hard conversation. The lack of rain in Spain continues to embolden the sellers and they seem to be united in keeping to fairly high levels. How long can they HOLD and accumulate inventory / financial costs? The answer is as long as the market seems to be stable. If the OUTPUTS (local consumption /exports minus import) in Spain continue to be sluggish – one could speculate that Spain will want to make some sales to get inventory more in line to get to a CARRY OVER number that is more comfortable. However, the producers are very much aware that Tunisia and Turkey will most likely not have the oversized crops they had this season. Which means a higher carry over might be warranted heading into the new season (2018/2019). Hard to discuss next crop already, you can be sure it is on some producers’ thought process already.

So, to make an easy question into a long story (sorry). My best recommendation would be to cover till at least end of June. If the EURO would be more predictable we could be more definitive. A dollar strengthening between now and June may very well hurt making your coverage NOW.



Also, not an easy conclusion. In a supply / demand conversation – the answer is clear, Turkey and Tunisia have lower level lampante costs and have plenty of it. They will try to keep a spread between Spanish price levels and their selling prices. If Spain raises prices – Turkey/Tunisia will also try to raise prices on refined. However, both countries would like to turn this crop into monies, and any sale over 3.00 EURO per kilo FOB, is a good return for farmers and exporters. Unlike Spain, they are of a mind set to sell,  not to WAIT/SEE.

Another long explanation with the wild card of the EURO. If one covers far out and the dollar strengthens, you will have some issues. If you do not cover and the dollar weakens, you also will have some issues. Darn if you do Darn if you do not. My best advice is to go out 3 months and watch the EURO carefully.


Another perplexing market. 30 days ago, prices were coming down as they should as the new crop was being harvested and raw materials inventory would be plentiful. Somewhere along the time frame – the market firmed. Not sure if it was due to lack of available crude or refined, or the renewed demand that the lower prices seem to engage. In either case, the market jumped 100 EURO per ton. The orthodox view is that once the crop is harvested and the pulp is readily available and in the amount the world-wide crop harvested, that supply would overtake demand and prices will reflect that.

Another recommendation to cover until end of April and pay attention to the EURO.

***** 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.



Very dangerous time for Importers, as these daily swings are extremely hard to meld into a costing, especially if it is for long term shipping periods. One can make a great purchase this month on raw material and cover the EURO at spot. Literally next month, someone who missed the raw material market makes a purchase at a higher raw material level, however the dollar had strengthened during that period, the LATE buyer may very well have a lower landed cost. So buying and recommending position are not only linked to raw material speculations – they are also closely tied to the timing of the EURO / DOLLAR relationship.

From November 21st until January 29th:

AVERAGE = 1.1976

HIGH = 1.2433

LOW = 1.173