W33 2024: Olive Oil Weekly Update

Published 2024년 8월 23일

In W33 in the olive oil landscape, Spanish olive oil surpassed Italian olive oil in price in the US market for the first time in the first half of 2024. During this period, Spain's olive oil exports to the US increased 20.5% YoY, with rising demand also observed in the Japanese market. The SOOIO agreement has been expanded by MAPA, mandating financial contributions from stakeholders to support activities such as promotion and research from 2024 to 2029, focusing on increasing olive oil consumption. Italy is experiencing severe drought and heat waves, leading to a potential 50% reduction in olive oil production due to water stress in the southern regions. The agricultural sector faces significant losses, with farmers incurring high costs for emergency irrigation. In Q2-24, Peru's olive product exports decreased YoY in volume and value despite a YoY increase in the average export price, with Brazil and the US being the top two destinations.

1. Weekly News

Spain

Spanish Olive Oil Price Surpassed Italian In the US Market

In the first half of 2024, Spanish olive oil was sold at an average price of USD 9.6 per kilogram (EUR 8.81/kg) in the United States (US), surpassing the average price of Italian olive oil for the first time, which was USD 9.4/kg (EUR 8.62/kg). During this period, Spain's olive oil exports to the US increased by 20.50% year-on-year (YoY), amounting to 70 thousand mt, which is 10 thousand mt more than the imports from Italy. This trend is also observed in other international markets, such as Japan, where the demand for Spanish olive oil is rising

Spain Promotes Local Olive Industry Through Financial Contributions

Spain's Ministry of Agriculture, Fisheries, and Food (MAPA) expanded the Spanish Olive Oil Interprofessional Organization (SOOIO) agreement to cover the olive oil sector, effective from Oct-24. The new initiative mandates financial contributions from all stakeholders in the industry, aiming to support activities such as promotion, research, development, and technological innovation in the olive oil sector from 2024 to 2029. At least 80% of the total contributions will be used to promote olive oil and increase its consumption.

Italy

Italy's Olive Production Faces Challenges From Drought and Heat Waves

Italy faces severe drought and heat waves, negatively affecting its olive production, especially in the southern regions. Due to water stress, olive oil production could be reduced by over 50%. Insufficient rain in Sicily resulted in smaller olive fruits, with the record heat in Sardinia exacerbating the situation. The agricultural sector is suffering significant losses, with farmers incurring high costs for emergency irrigation.

Peru

Peru’s Olive Products Exported Declined in Q2-2024

In Q2-24, Peru’s olive products exports declined 41.5% YoY in volume and 20.3% YoY in value, despite a 36.2% YoY increase in the average export price. During this period, the country exported 6,856 metric tons (mt) of olive products worth USD 16.5 million to 23 markets, with Brazil and the US being the top two destinations. The exports consisted mainly of processed olives (70.5%), followed by olive oil (18.7%) and fresh olives (10.8%).

2. Weekly Pricing

Weekly Olive Oil Pricing Important Exporters (USD/kg)

* All pricing is wholesale * Varieties: All pricing is for extra virgin olive oil

Yearly Change in Olive Oil Pricing Important Exporters (W33 2023 to W33 2024)

* All pricing is wholesale * Varieties: All pricing is for extra virgin olive oil * Blank spaces on the graph signify data unavailability stemming from factors like missing data, supply unavailability, or seasonality

Spain

In W33, Spain’s olive oil prices increased by 2.46% week-on-week (WoW) to USD 7.91/kg, reflecting a 3.26% month-on-month (MoM) rise and a 6.61% YoY drop. Despite a weekly price rise, Spain’s olive oil price declined by 22.8% in 2024 due to the government's 0% Value Added Tax (VAT) and large supermarkets’ promotional activities. However, in the international market, Spanish olive oil has surpassed the Italian products in prices due to its higher quality standard. A similar trend is also observed in the Japanese market. The country’s olive production in the 2024/25 season is expected to increase YoY due to favorable weather conditions, which will likely stabilize global prices.

Italy

Italy's olive oil price increased by 1.38% WoW to USD 10.31/kg in W33, compared to USD 10.17/kg in W32 due to the devaluation of US dollars against euros. A 3% increase was observed in MoM and YoY prices. The country's olive production faces challenges from climate change, with increasing frequency of droughts and heat waves, reducing olive yield, and rising prices. Despite the production challenges in Italy, global olive oil production is forecasted to increase 22% YoY to 2.92 billion metric tons in the 2024/25 season, with the European Union (EU) dominating 70% of the total production, according to the United States Department of Agriculture (USDA).

Portugal

In Portugal, olive oil prices in W33 stood at USD 11.56/kg, reflecting a WoW increase of 1.4% from USD 11.40/kg in W32. This rise is primarily due to the euro's appreciation against the US dollar. In euros, the price has remained consistent throughout the month. Like Italy, Portugal's olive production also faces challenges from low mechanizing harvest and spreading pests and diseases. However, the country has invested heavily in researching and finding new varieties to support local production and enhance quality. As a result, the country's olive production is forecasted to increase 25% YoY in the 2023/24 season.

Tunisia

In Tunisia, olive oil prices rose 1.26% WoW to USD 8.02/kg in W33, up from USD 7.95/kg in W32. Despite this increase, prices fell 2.54% MoM from USD 8.26/kg in W30, reflecting a broader recovery in global supply. The severe drought has significantly impacted Tunisia's olive harvest, increasing oil prices. Farmers are adopting new irrigation techniques and organic farming methods to cope with the extreme weather. Tunisia, which has distanced itself from the International Monetary Fund (IMF) and clashed with the EU over aid for its struggling economy, is now leveraging olive oil exports as a critical revenue source to help avert a financial crisis.

3.Actionable Recommendations

Capitalize on Price Leadership in the US Market

Spain's ability to surpass Italy in olive oil pricing in the US market presents a unique opportunity to solidify market share. Spanish exporters should capitalize on this momentum by expanding marketing campaigns highlighting their olive oil's quality and competitive pricing. Spanish exporters should build long-term partnerships with US distributors and retailers, which can further entrench Spain's position as the preferred olive oil source.

Mitigate Climate Risks through Advanced Agronomy

Italy's olive production faces significant risks from climate change, particularly droughts and heat waves. To reduce vulnerability to extreme weather, producers should invest in advanced agronomy techniques, such as drought-resistant olive varieties and precision irrigation systems. Exploring partnerships with agricultural technology firms to implement these solutions could improve yield and enhance quality.

Leverage Research Investments to Boost Production

Portugal's investment in new olive varieties and research presents a significant opportunity to enhance production and quality. Producers should prioritize adopting these new varieties to increase yields and reduce vulnerability to pests and diseases. Collaborating with research institutions to further refine these innovations can ensure that Portugal remains competitive in the global olive oil market.

Sources: Tridge, Lne, Agrodiario, AgroPeru, OliMerca