Fluctuating dynamics: the olive oil market's response to price shifts and supply surges
The olive oil market witnessed a significant downturn in recent weeks following a pinnacle of €8.50/kg for Mintec’s Benchmark Price for Spanish olive oil [Mintec Code: 8G39], the highest price ever recorded for the commodity, according to Mintec data spanning more than 20 years. By 17th November, the Mintec Benchmark Price had plummeted to €7.80/kg, marking the lowest price since 5th July, 2023.
This decline follows the influx of new-season production, flooding the market with increased olive oil supply. The surplus coincided with reduced purchasing across the sector, compelling producers to slash prices to entice buyers.
However, this surge in supply and price reduction contrasts with market estimates for upcoming crops. Projections for Spanish olive oil production range from 720,000 to 760,000 metric tonnes, a boost of about 120,000 metric tonnes compared to the previous season according to market players. Despite this increase, it falls significantly short of a typical year which would yield around 1.2 to 1.5 million metric tonnes due to Spain's scorching and dry summer months. This scenario hints at an imminent shortage, shaping a complex market landscape traders are struggling to navigate, as reported to Mintec.
Further complicating matters are concerns about reduced production in other major European olive oil-producing countries. Greece for example is facing drought conditions, with Greek industry players expressing to Mintec the possibility of a harvest yielding around 180,000 to 200,000 metric tonnes—a stark decrease from the previous season's estimated 320,000 to 350,000 metric tonnes. Market players commented to Mintec that their EU-wide estimates vary between 1.3 to 1.45 million metric tonnes, notably lower than the EU Commission's five-year average of 2.1 million metric tonnes and the 2023/24 season's estimated 1.5 million metric tonnes.
Quality concerns loom over the olive oil produced this season, with uncertainty about the proportions classified as extra virgin or virgin grades versus Lampante. Determining the crop's quality will be crucial, potentially mirroring the competitive demand seen last season for higher-grade olive oils.