Growing concerns as Spanish olive oil stocks decline in August report
The Spanish olive oil sector is grappling with growing concerns surrounding the availability of olive oil in the coming months. These concerns have intensified following the release of the August olive oil report from the Spanish government, which shows dwindling stocks. In August alone, stocks plummeted by 60,000, to 65,000 metric tonnes. Presently, industry participants estimate that manufacturers hold only about 115,000 metric tonnes of available olive oil stock.
What is alarming is that these challenges stem from a sharp reduction in olive oil production in Spain during the last season. Market players estimate that production slumped to approximately 610,000 metric tonnes, a significant drop from the usual 1.3 to 1.5 million metric tonnes typically seen in Spain. Concerns loom even larger for the upcoming harvest, with estimates suggesting production might reach just 650,000 metric tonnes, marking another substantial decline from Spain's historical volumes.
Should this pace of depletion persist, market insiders warn that olive oil supplies could be exhausted before the arrival of fresh harvests, which traditionally commence in Spain around October. There is some hope that early harvesting countries like Portugal may step in to provide Spanish players with extra virgin volumes, helping to offset the shortage.
The relentless drawdown of stocks has led to the Mintec Benchmark Price (MBP) for Extra Virgin Olive Oil from Andalusia soaring to €8.45/kg on 8th September 2023. This marks the highest price ever recorded for Spanish olive oil, based on Mintec data spanning over 20 to 30 years. It represents a substantial 111% year-on-year increase.
Adding to the complexity of the situation are concerns about reduced production in other major European olive oil-producing countries, including Italy and Greece, where drought conditions prevail. Industry players predict the upcoming Greek harvest to be around 160,000 to 170,000 metric tonnes, down significantly from an estimated 340,000 metric tonnes in the previous season. Similar declines are anticipated in Italy, according to market players. Industry insiders have provided Mintec with estimates ranging from 1.3 to 1.45 million metric tonnes of olive oil production in the EU, a notable drop from the EU commission's five-year average of 2.1 million metric tonnes.
Further complicating matters is Turkey's decision to suspend bulk olive oil exports until 1st November, a move attributed to the global surge in olive oil prices. There are concerns about the potential impact of Turkish oil sales to third countries by Spain and Italy. If not managed carefully, this could exacerbate domestic consumption challenges due to a supply shortage. The suspension has worsened the already limited volumes in Spain, leaving buyers with fewer sourcing options and potentially leading to difficulties in obtaining the product.
Mintec will continue to provide updates on the evolving situation in the olive oil market as more details emerge.