W45: Olive & Olive Oil Update

In W45 in the olive and olive oil landscape, the European Union (EU) predicts nine EU countries will produce 1.5 million tons of olive oil in the 2023/24 crop year. The EU's estimate would be 9% above the previous season's low of 1.38 million tons. However, due to a below-average harvest and market scarcity, olive oil prices are expected to remain high, impacting global consumption.

In Aug-23, virgin olive oil prices in Jaén, Spain, reached USD 21.68 per 100 kilograms (USD 820/100kg), the highest price ever recorded and three times the average over the previous five years. This rising trend is expected to negatively impact EU olive oil exports, with exports dropping by 40% between Apr-23 and Jun-23, and by 23% between Oct-22 and Jun-23. Non-producing EU consumption is also expected to fall, from 1.02 million metric tons (mt) in 2022/23 season to 950 thousand mt in the 2023/24 season, resulting in a 6% YoY decline in EU olive oil consumption.

With Italy being the exception, three of the top four significant producers of olive oil had challenging harvests. While heavy spring rainfall hindered flowering in some areas, it helped the south's olive harvest. A hot and dry spring brought summer conditions conducive to pest infestations and olive fruit fly infestations in Spain, Portugal, and Greece. The EU predicts Greece's olive oil yield to decrease by 20% YoY in the 2023/24 season. The EU is dealing with a shortage of olive oil supplies and production reductions; the new harvest year began with just 307 thousand tons, a decrease from 670 thousand tons the year before.

Italian olive oil producers and industrialists experienced challenges due to low market prices and production costs. The high price of extra virgin olive oil in W45, which ranges from USD 7.58 or 8.67/bottle (or EUR 7 or 8/bottle), slows down the consumption. In the first ten months of 2023, extra virgin olive oil sales fell by 9% YoY.

Turkey's olive and olive oil production has increased due to droughts in Spain, Italy, and North Africa. However, demand has increased, and Muğla province has become a global brand in olive oil production. The region has nearly 100 thousand hectare (ha) of olives, and in 2022, nearly 400 thousand tons of oil olives were harvested. Furthermore, Turkey's olive oil stock is expected to reach 330 to 350 thousand tons in 2023, with 150 thousand tons remaining in stock from 2022. However, prices are expected to increase by over 100%, with the price per liter of olive oil exceeding USD 13.94 (TRY 400). Industry representatives argue that high prices are due to input costs, including production, collection, processing, bottling, and logistics, which increased by 150% YoY.

Lastly California is experiencing a high olive harvest, with an estimated three million gallons (around 11.36 million liters) of olive oil produced, a significant increase from the 1.87 million gallons produced in the previous crop year and a 25% increase above the five-year average. The harvest timing is normal, with full production expected by Nov-23. However, not all producers across the state are experiencing the same increase, with some expecting better yields in the central coast and northern California regions. California's table olive crop is expected to reach 41 thousand tons in 2023 due to record snowfall and rain. The United States Department of Agriculture (USDA) predicts a yield of 3.31 tons per acre, with Manzanillo production at 39 thousand tons, Sevillano at 1.9 thousand tons, and other varieties at 100 tons.