` Increased Trade in Olive Oil Futures

Europe

Increased Trade in Olive Oil Futures

May. 30, 2013
By Julie Butler

Recent News

The Olive Oil Futures Mar­ket (MFAO) booked a €213,000 ($280,000) loss last year despite a 28 per­cent spike in the num­ber of con­tracts nego­ti­ated in it. But its for­tunes turned around in the first quar­ter of this year — as move­ments in olive oil prices sparked even more trade — see­ing it end April with a profit of nearly €136,300 ($180,000).

The mar­ket closed 2012 with nearly 98,000 con­tracts nego­ti­ated, up about 21,000 on 2011, and with August and Decem­ber by far the busiest months.

The aver­age price last year was €2,083/t and the total value nego­ti­ated was nearly €204 mil­lion, up from €1,660 and €76 mil­lion in 2011.

Futures mar­ket a use­ful hedg­ing tool”

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Manuel León, pres­i­dent of the Jaén-based mar­ket, told Span­ish media that the vast major­ity of 2012’s trade took place in the last half of the year, when ex-mill prices for olive oil were ris­ing and the out­look was poor for the next har­vest.

He said the increase in the num­ber of con­tracts rein­forced the market’s role in pro­vid­ing a hedge against price volatil­ity.”

It’s a use­ful tool for the indus­try and good price obser­va­tory,” he said.

Those most active in the mar­ket were big com­pa­nies. Many smaller com­pa­nies were still unaware of the advan­tages of being active in the MFAO, León said.

First quar­ter recov­ery

The busiest month in the most recent quar­ter was Jan­u­ary, when 18,000 con­tracts were nego­ti­ated, though leav­ing the market’s record for the most trade in a month still stand­ing at 23,115 con­tracts, from Jan­u­ary 2010.

The total for the first quar­ter this year had reached 44,000 by April 23.

More activ­ity online

The MFAO is also enjoy­ing a spike in activ­ity on its web site. Its trad­ing screen received a record (since 2005) num­ber page views — 7.9 mil­lion — in 2012, up from 1.4 mil­lion in 2011.

The only mar­ket in the world where futures con­tracts on olive oil can be traded, it opened in Feb­ru­ary 2004 and made its first profit, €116,000, in 2010, but 2011’s flat­line prices — reduc­ing the need for buy­ers or sell­ers to hedge against price swings — sent it back into the red with a €300,000 loss.



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