`What's Going On with Olive Oil Prices in Spain?

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What's Going On with Olive Oil Prices in Spain?

Jul. 1, 2014
Yago Cruz

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Let me please explain my per­sonal opin­ion, as an expert and after talk­ing to CEOs from dif­fer­ent pro­duc­tion coun­tries, to share what I see hap­pen­ing in the olive oil mar­ket and its prices.

I won­der if the three big global olive oil com­pa­nies don’t fix prices to make more profit.- Yago Cruz, Cru­zo­liva

Some fig­ures indi­cate that prices should not be going up the mar­ket:

- Pack­ers kept their stocks in late May to 200,036 tones.
 — Mills have 776,380 stored tons.
 — Out­lets mov­ing in the mid­dle had 130,000 tons.
 — The total stock was 1,016,000 tons.

Accord­ing to these fig­ures, prices should have remained lower in these weeks of June and the begin­ning of July because, even though the out­puts are good, stocks are high, and the pack­ers have enough stock for the next two months. But the mar­ket has reacted in a very dif­fer­ently way. Some­times I won­der if the three big global olive oil com­pa­nies don’t fix prices to make more profit.

Now here are the rea­sons, as I see it, that have erupted with force to cause the rise is prices.

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- Futures have shown a clear upward trend over the com­ing months and the begin­ning of the cam­paign.
 — Indus­trial Pack­ers have cho­sen to cover a longer term.
 — Ital­ians, still buy­ing heav­ily in our mar­ket, are pay­ing above domes­tic prices.
 — Spec­u­la­tion has also entered the game and are car­ry­ing out numer­ous acts of resale, to raise cash and prof­its at cur­rent prices.

And, espe­cially, indus­trial and coop­er­a­tive mills have closed in band and are not will­ing to sell because they made some cash in the last weeks and they feel they can wait before sell­ing and increase mar­ket prices. This is very com­mon to see every year.

Finally, the indus­try is catch­ing on to the fact that next sea­son will not be so good because the weather con­di­tions have affected flow­er­ing and olives also shows signs of exhaus­tion after the record for the cur­rent sea­son.

Still, I esti­mate next year’s pro­duc­tion to be between 1.1 and 1.2 mil­lion MT for Spain (even if coop­er­a­tives are say­ing under 1 mil­lion — a tac­tic to increase prices for the sum­mer time).

Mean­while, time will tell. How­ever, with over 1 mil­lion ton of stock in Spain, they will need to sell it at some point.



The author is the CEO of Cru­zo­liva, a Span­ish sup­plier of bulk olive oils. Do you have an opin­ion you’d like to share in an arti­cle? See our sub­mis­sion form and guide­lines here.

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