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.

an-increase-in-the-trading-of-olive-oil-futuresThe 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] “El Mercado de Futuros del Aceite de Oliva de Jaen ha Negociado 107 Millones de Kilos en el Primer Semestre”

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