World olive oil production from 2017/18 has shown some steady numbers. Production from the 2017/18 crop year to 2019/20 averaged 3.31 million mt, helping keep supplies somehow ample in those 3 years. In 2020/21 year, however, world production dipped slightly to a little over 3 million mt before rising 13% in 2021-22 to 3.39 million mt.
Stable production in non-EU countries and a strong decrease in the European Union has meant global production in the current 2022/23 year is forecasted down 26% YoY to 2.51 million mt. Accounting for this fall is EU production in the same year expected to fall 39% to 1.39 million mt, while that of non-EU countries is expected only 1% down to 1.12 million mt. Looking at the 5-year trend, World production in the 2022-23 year is down 23% vs the 5-year average. The EU production is 35% down on the 5-year average, while that of non-EU olive oil producers is only 1% down.
The stable non-EU numbers are on the back of year-on-year gains in Syria and Türkiye and other non-EU countries (+8% YoY) and reductions in Tunisia and Morocco: the Syrian 2022-23 crop is forecasted up 27% YoY to 135 thousand mt while that of Türkiye is expected to be 275 thousand mt up 17% on the previous year.
The EU forecast has been pushed down by reductions in Portugal, Italy, and Spain with Greece being the only exception. However, Greece’s 42% YoY gain to 330 thousand mt in the 2022-23 crop year is not strong enough to offset the losses of the others. Spain's production is anticipated to fall by more than half from 1.49 million mt in the 2021-22 crop year to 680 thousand mt this year. In Portugal, a similar reduction has been forecasted down 39% YoY to 126 thousand mt this crop year. Production in Italy, another big EU producer is also forecasted down 27% YoY to 240 thousand mt this crop year.
Because the EU supplies close to 70% of the world's olive oil needs, the reductions in the EU will impact the global supply situation. Also, any holes in the EU olive oil balance sheets also push to startle the global olive oil balance. The reduction in EU production is thus a concern for consumers, buyers and even processors. In that light, EU 27 imports of olive oil from third world third countries from October last year to January was 54,743 tonnes 11% up compared to the same period in 2021-22. The exports from the EU27 from October to January of the 2022-23 year also fell 8% compared to the same period in the previous crop year.
The estimated EU ending stocks is at 281 thousand mt but with the opening stocks at the start of the season at 671 thousand mt, it goes without saying that the current year will be tighter than initially thought.
With consumption expected to ramp up, saying the market dynamics will cause prices to at least firm is an understatement. So far, Tridge has seen prices move within the upper band and may continue to hold at that level toward H2 of 2023. The Tridge Spanish wholesale virgin olive oil benchmark price has seen gains and is currently trading at €5500/mt. Similar price behaviour is reported in Italy and Greece. Prices quoted by the EU commission puts Italian extra virgin olive oil at €611.3 per 100 kg up 1% MoM and 47% YoY while that of Greece is at €470.3 per 100 kg also up 1% MoM 45% YoY.