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.
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.
– 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.