`Positive Signs for Olive Oil Sector in E.U. Report - Olive Oil Times

Positive Signs for Olive Oil Sector in E.U. Report

By Paolo DeAndreis
Aug. 6, 2021 07:48 UTC

The progress in the Covid-19 vac­ci­na­tion cam­paign in Europe is pos­i­tively affect­ing the recov­ery of the agri­cul­tural sec­tor, accord­ing to the European Commission in its lat­est short-term out­look for agri­cul­tural mar­kets.

This is due to the reopen­ing of the food­ser­vice sup­ply chain, the restau­rant and hos­pi­tal­ity (Horeca) sec­tor and eas­ing of the travel restric­tions.

A cau­tious esti­mate would sug­gest the E.U. 2021/22 har­vest may be com­pa­ra­ble to the cur­rent one.- European Commission, 

Driving the recov­ery fore­seen for the sec­ond half of 2021, the report cites strong demand for E.U. agri­cul­tural prod­ucts from the United States and China. Increased demand from the world’s two largest economies is affect­ing many food exports, includ­ing olive oil.

The report also showed a slow but steady recov­ery of E.U. exports to the United Kingdom, which dropped sig­nif­i­cantly after the Brexit tran­si­tion period began.

See Also:Global Olive Oil Production Will Hit Four-Year High, USDA Estimates

According to the com­mis­sion, the still com­plex pan­demic sit­u­a­tion in coun­tries such as Russia, Brazil, India and many parts of Africa, is not hav­ing a sig­nif­i­cant impact on E.U. trade prospects in the com­ing months.

Despite an increase of E.U. olive oil pro­duc­tion in 2020/21, grow­ing exports and the recov­ery in domes­tic demand (+5 per­cent) are expected to con­tribute to reduc­ing stocks which are expected to fall below 2017 level,” the com­mis­sion said.

Those con­di­tions affect the above-aver­age prices for extra vir­gin olive oil in the main con­ti­nen­tal mar­kets: Spain, Italy and Greece.

At the moment, prices remain higher than the aver­age of the last five years. According to the com­mis­sion, in Jaén in May, extra vir­gin olive oil almost reached €330 euros per 100 kilo­grams, 20 per­cent above aver­age.

Lower olive oil pro­duc­tion esti­mates for Spain resulted in an over­all 2020/21 E.U. olive oil pro­duc­tion of 2.1 mil­lion tons (seven per­cent above the pre­vi­ous cam­paign),” the com­mis­sion said. This reduc­tion is linked to an over­all decline in oil yield (-12 per­cent). Spain and Italy suf­fered the most from this (-31 per­cent and ‑39 per­cent, respec­tively).”

The report also showed that European olive oil exports are on pace to set a new record. In the first six months of the last cam­paign, exports rose by seven per­cent, with an aver­age price in March of €340 per 100 kilo­grams.

Compared to the sky­rock­et­ing prices of oilseeds, the lower olive oil prices in some coun­tries could incen­tivize E.U. domes­tic con­sump­tion and it could grow by five per­cent, dri­ven by an increase in main pro­duc­ing coun­tries (+7 per­cent),” the com­mis­sion said.

According to the com­mis­sion’s esti­mates, European olive oil con­sump­tion in non‑E.U. coun­tries should stay at the high level of last year while an increase in olive oil exports to Asian coun­tries is expected. Exports at the begin­ning of the year have been impeded by logis­ti­cal issues that occurred at the begin­ning of 2021.

The European Commission also expects to see strong export fig­ures to the U.S., whose olive oil imports from last October to April have grown 24 per­cent. With the agree­ment to drop tar­iffs on a range of man­u­fac­tured and agri­cul­tural goods, includ­ing olive oil, E.U. exports to the U.S are now expected to grow even more.

The com­mis­sion believes that as a result E.U. olive oil exports could exceed 880,000 tons in 2021, an increase of 29 per­cent com­pared to the aver­age exports of the last five years.

The report also empha­sized how olive oil imports to the E.U. are expected to reach 380,000 tons, which is less than the five-year aver­age. Given grow­ing global olive oil demand, dimin­ish­ing imports are also expected to help reduce end stocks.

Despite reported cold weather in some E.U. pro­duc­ing regions, the actual impact on the new har­vest is yet to be seen,” the com­mis­sion said. In gen­eral, the cold spell had a lim­ited impact on flow­er­ing in Spain, which in last weeks reported a slight drought.”

Dry and hot weather over sum­mer will be a fac­tor to mon­i­tor. In Italy, south­ern pro­duc­ing regions… suf­fered from a tem­per­a­ture drop that came after high tem­per­a­tures had trig­gered early flow­er­ing,” the com­mis­sion added. This raised some con­cerns about poten­tial lower yields. A cau­tious esti­mate would sug­gest the E.U. 2021/22 har­vest may be com­pa­ra­ble to the cur­rent one.”

An aver­age pro­duc­tion com­bined with low begin­ning stocks would con­tinue sup­port­ing E.U. olive oil prices in the short term,” the com­mis­sion con­cluded.


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