Surprising surge: Spain's olive oil production estimates increase significantly
The Spanish olive oil sector is currently grappling with concerns about olive oil availability in the months ahead. However, there has been a noteworthy shift from previous estimates for the upcoming Spanish harvest, slated to begin in October. Industry insiders have informed Mintec that production could reach 700 to 750,000 metric tonnes due to recent rains and the forecast of more downpours in the coming weeks. This represents a significant uptick of 100,000 metric tonnes compared to earlier estimates reported to Mintec in the preceding weeks.
Additionally, market sources suggest that production in Andalusia may experience a dip to approximately 550,000 to 560,000 metric tonnes, representing a 6 to 7% decrease compared to the previous season. This decline in Andalusia's production seems to be offset by improved production in other regions of Spain, as reported by market players.
Despite the relatively slow depletion rate in Spain at the time of writing, primarily due to the poor harvest in the previous season, which market players estimate at 610,000 metric tonnes, industry insiders continue to caution that olive oil supplies could run low before the arrival of the fresh harvests, traditionally commencing in Spain around October. There is some hope that early harvesting countries like Portugal may step in to provide Spanish players with additional volumes of extra virgin olive oil. Mintec has learned that these supplies are being offered at prices ranging from €8.00/kg to €8.10/kg, representing a significant decrease compared to the prices of the previous crop, which stood at €8.40/kg to €8.50/kg just a few weeks ago.
The optimism generated by the increase in potential production volumes from Spain has led to the Mintec Benchmark Price (MBP) for Extra Virgin Olive Oil from Granada to drop for the second time in several weeks shedding 20 Euro cents.
Adding to the situation's complexity are concerns about reduced production in other major European olive oil-producing countries, such as Italy and Greece, where drought conditions are prevalent. Industry players predict the upcoming Greek harvest will yield around 160,000 to 170,000 metric tonnes, a significant decrease from an estimated 340,000 metric tonnes in the previous season. Similar declines are expected 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 noticeable drop from the EU Commission's five-year average of 2.1 million metric tonnes.
Further complicating the situation 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 exacerbated the already limited volumes in Spain, leaving buyers with fewer sourcing options and potentially leading to difficulties obtaining the product.
