`An Increase in the Trading of Olive Oil Futures


An Increase in the Trading of Olive Oil Futures

Jul. 26, 2010
Daniel Williams

Recent News

By Daniel Williams
Olive Oil Times Con­trib­u­tor | Report­ing from Barcelona

MFAO, the offi­cial exchange mar­ket reg­u­lated by the Span­ish finan­cial author­i­ties, was the first mar­ket in the world to trade futures con­tracts on olive oil. The MFAO in Jaén dealt in 107.3 mil­lion kilos of olive oil in the first 6 months of this year alone, a whop­ping 54% increase from last year’s fig­ures, and for the first time since 2009, the MFAO’s fig­ures show sur­pluses and con­sid­er­able gains. In these short six months, the MFAO has sur­passed 75% of the entire fig­ures for 2009.

Accord­ing to Manuel León, pres­i­dent of the MFAO, these promis­ing fig­ures are the result of, the impor­tant com­mer­cial work being brought to fruition which allows for a greater pen­e­tra­tion of the mar­ket mech­a­nism, prin­ci­pally in our deal­ings with the coop­er­a­tive and olive oil mill sec­tors.” Fur­ther­more, Léon points to the cur­rent sit­u­a­tion of olive oil prices which is mak­ing pro­duc­ers search for alter­na­tives to tra­di­tional meth­ods of commercialization.”[1]

The MFAO fig­ures also show an increase in the aver­age vol­ume of daily nego­ti­ated con­tracts with a total 242 clients, a 5% increase in fig­ures from Decem­ber 2009. On aver­age this year there have been 873 con­tracts nego­ti­ated daily, a 53% increase from last year’s aver­age of 571. Per­haps a more notable improve­ment is that for the first time ever, 50% of the MFAO clients have been pro­duc­ers, coop­er­a­tives and olive oil mills. Pre­vi­ously the major­ity of clients have been play­ers in the finan­cial and indus­trial sec­tor or olive oil bot­tlers.

Manuel León

Addi­tion­ally, there has been a marked improve­ment in the num­ber of trans­ac­tions made with for­eign mar­kets after the solid­i­fi­ca­tion of a num­ber of agree­ments with Por­tuguese and Ital­ian banks. Span­ish olive oil sales to the United States alone have increased some 17.3% in the first trimester as com­pared to last year’s aver­ages. Despite the world eco­nomic cri­sis, the Amer­i­can mar­ket still presents great oppor­tu­ni­ties for fur­ther growth and inter­na­tional expan­sion for Span­ish olive oil.


On the other hand, how­ever, pric­ing woes con­tinue to plague pro­duc­ers as the aver­age price of olive oil nego­ti­ated in 2010 sits at a wor­ry­ing 1.764 euros per kilo of olive oil, ten cents below the aver­age of 1.867 dur­ing 2009 and a far cry from 3.278 euros/kilo nego­ti­ated dur­ing Spain’s golden year of 2005.

MFAO, based in Spain, is the only mar­ket in the world where futures con­tracts on olive oil can be traded.

The mar­ket, which was cre­ated four years ago, has been mainly used by olive grow­ers to pro­tect them­selves against price swings. Olive oil prices are excep­tion­ally volatile, so both grow­ers and pro­duc­ers have an incen­tive to use futures in order to hedge against price fluc­tu­a­tions. How­ever, MFAO wants to go fur­ther, and it is now plan­ning to attract spec­u­la­tive invest­ment by major finan­cial insti­tu­tions.



[1] http://www.noticiasdjaen.es El Mer­cado de Futuros del Aceite de Oliva de Jaen ha Nego­ci­ado 107 Mil­lones de Kilos en el Primer Semes­tre”

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