SUMMER BLUES

By Don Griego on

Posted on August 8, 2022

The HEAT is on in Europe. Temperatures ranging from 40 – 45 Celsius (104-110F). Right now this is the most pressing issue facing olive oil pricing. The extreme temperatures will undoubtedly effect the production in Europe. The heat and lack of water in reservoirs is unprecedented in my career (1981).

Quantities being offered are limited. Prices on extra virgin and refined are firm, and will continue to be firm. We are not sure even, with rain in August/September that price increases will not continue. The reality is even with rain and a slowdown of consumption / exports , we are not convinced the market on EV and refined will move lower (quite frankly it will move higher) until production starts in October – maybe even into November.

There is definitely going to be a major concern heading into new crop. The reduction of the Spanish crop below normal production will have a ripple effect on prices throughout the Mediterranean. Spain will become a buyer in Turkey and Tunisia. Europe and US are the two main consumers of olive oil, and will compete for suppliers/supply when their own production is not sufficient. Italy has been a major buyer outside of their own production forever. US importers have competed for supply in third countries with Italy forever. Timing of purchases will be key component of staying ahead of the market come November.

Spain really needs rain in September if not earlier. This is not a false narrative.

We recommend you stay ahead of your position as much as possible on extra virgin and refined. It’s still too early to forecast what the new crop prices will be. Of course, extending your Extra Virgin position is tricky to ensure the organoleptic and fluent parameters remain at appropriate levels. Refined is not a large issue when it comes to shelf life. Pomace is still very much a month to month situation until its clear what new crop prices will be on refined/extra virgin. The difference is the availability of sunflower now readily available in Spain. With sunflower prices will keep pomace price levels in check. It will NOT be like last year, with pomace prices exploding due to the scarcity.

If you want to have this conversation, we are here to come up with viable game plan heading into the new crop.

Stay Tuned for upcoming weather developments in Spain and rest of EUROPE

 

The below was posted on July 8, 2022

SOME LIKE IT HOT

That’s a famous movie title. Unfortunately olive trees can withstand the heat IF they have enough water to help them through the hot summers in Spain. Olive trees are similar to camels, they can go a long time without a great deal of water. However, the water situation in Spain has been a large issue for a number of years now. There does not seem a way to get the reservoir levels back to normal or even acceptable levels. So although it not unlike the Spanish producers to complain vigorously about the wilting of the olive set. Unfortunately, like the story of the Boy who Cries Wolf, they are town criers when it comes to lack of rain. Just last year, they shouted from the rooftops, that the crop was going to affected. Well, YES< it was affected, the crop exceeded earlier expectations. However, this time, believe there maybe something to these rumblings. There’s a long way to go before any chance of rain. (probably earliest late August) AND the weather is hot even by Spain’s standards.

MARKET is FIRM

This week, as producers start their summer holidays. Raw material costs are rising. Offers are few and small in quantity. Once a sale is completed, producers raise prices and offer some additional small lots. This will NOT change until it rains, or the OUTPUTS in Spain come off significantly. The food inflation in Spain is increasing, and olive oil is a mainstay of consumers purchases in Spanish supermarkets. It is important to note, that OUTPUTS in Spain have been quite strong in 2022. It will NOT be one month of a downward numbers in OUTPUTS. For buyer a perfect storm, will be June and July with poor OUTPUTS and rain to come in middle of August. There is very little buyers can do in terms of purchasing. One must wait. If you need, buy what you need to get you through end September. The $ 64,000 question, does one cover till end of the year into new crop.

Other producing countries seem to heading to good crops. Please note, a fall off from Spain by 300,000 tons will more than offset any strong crops in these other countries. Another important fact is that there is no much or at all lampante. This forces refineries to refine virgin (expensive) so from Spain you will see refined prices approaching and in some cases exceeding extra virgin prices.

TURKISH OLIVE OIL EXPORT BAN = FINISHED

Read Below — however inflation in Turkey has gone up considerably and will curtail any advantages Turkey may have on their olive oil costs.

SECTORAL ANNOUNCEMENT // About Olive Oil Export Restriction
Dear Member,

As it is known, with the “Communiqué on the Export of Some Agricultural Products” published in the Official Gazette dated January 27, 2022, the Ministry of Agriculture and Forestry was authorized to make periodic arrangements when necessary in the export of some products, including olive oil, and with the said Ministry order dated 26.02.2022, it was decided to restrict the export of Olive Oil (Others) (Bulk Olive Oil with Packaging Amount Exceeds 5 Kg) products with GTIP 150930000014 and 150990000018.

In the letter received from Izmir Provincial Directorate of Agriculture and Forestry, it was reported that the export restriction applied by the Ministry of Agriculture and Forestry on Olive Oil (Others) with GTIP (Olive Oil Packaging Amount Exceeding 5 Kg) products was lifted with the approval dated 07.07.2022 and 150930000014 150990000018.

In this context, it is stated that Plant Health Certificate and / or Health Certificate can be issued within the scope of the export of Olive Oil (Others) products with GTIP and 150930000014 150990000018 and that these products will be allowed to leave the country .

It is presented for your information.

Serap ÜNAL
Deputy Secretary General

For Detailed Information: Nehir Balkan