W37: Olive & Olive Oil Update

In W37 in the olive and olive oil landscape, the United States Department of Agriculture (USDA) has reduced its estimate for global olive oil production due to a poor olive harvest in the Mediterranean caused by extremely dry weather. Production for the 2022/23 agricultural year (October-September) is now expected to be 2.49 million metric tons (mmt), down from the previous forecast of 2.59 mmt.This represents a 25% decrease compared to the 2021/22 season of 3.31 mmt and the five-year average. Additionally, the USDA has lowered its production forecast for the 2023/24 agricultural year to 2.94 mmt from 3.25 mmt.

Global olive oil consumption in the 2022/23 season is projected to be 2.75 mmt, compared to 3.12 mmt in the previous season, and world exports are forecasted at 1.16 mmt, down from 1.41 mmt in the 2021/22 season. The shortage in supply has caused world prices for olive oil to exceed USD 8,900/mt, reaching record levels and showing no signs of decline. Prices have risen steadily since crop damage became evident, and concerns about supplies from Spain, which typically accounts for 45% of global exports, have led to a sharp price spike.

As the start of the Italian olive oil campaign approaches, a clearer picture of the olive growing season is emerging. The expectations for Italy's 2023/24 olive oil campaign is that of an average year, yielding about 50 to 60% of a bumper crop year. Rain and cool, humid weather during flowering significantly reduced fruit sets in regions like Puglia, Calabria, Sicily, and Tuscany. However, abundant spring rains have aided better drupe development. The temperature rise in August has been crucial for controlling various pathogens, including the olive fly, though a decrease in temperatures in September may pose further risks.

In Manisa, Turkey, hail and heavy rains from Apr-23 to Jun-23, and the subsequent dry summer months impacted olive trees, leading to a substantial decrease in yields. Turkey's Ministry of Commerce imposed a three-month ban on olive oil exports to counteract the surge in domestic prices. In response to the unfavorable conditions, olive producers have expressed dissatisfaction with their yields and are refraining from offering olives to the domestic market, citing sufficient supply. Presently, olive oil is sold for approximately USD 7.40/liter to USD 9.25/liter, with expectations of further price increases throughout the season.

The first table olive harvest of the year has commenced in the Silifke district of Mersin, Turkey. In Silifke, olive harvesting will cover 4,170 hectares (ha) of land, with 1,340 ha allocated for table olives and 2,830 ha for olive oil production. The harvest began in the second week of Sept-23 and is expected to continue until Jan-24. Due to variable weather conditions, olive yields have been low. In W37, buyers have been purchasing olives at prices ranging from USD 1.11 per kilogram (kg) to USD 1.85/kg, depending on the size of the olives.