W20: Olive & Olive Oil Update

In W20, in the olive and olive oil landscape, the USDA expects global olive oil production to rise by 24% in the 2023/2024 season to 3.2MMT, primarily due to crop prospects in the EU. Compared to the current year's production of 1.55MMT, the EU is expected to produce 2.1MMT of olive oil in the upcoming agricultural year (October 2023-September 2024). Additionally, the EU’s olive oil exports are anticipated to rise from 600K MT in 2022/23 to 750K MT in 2023/24, while global exports of olive oil will rise by 7% to 1.27MMT. Meteorologists predict an 80% chance of another El Niño developing by September or October 2023, which could affect global olive production. Scorching temperatures in March and April 2023 in southern Spain, the world’s largest olive oil producer, had impacted the coming harvest, and continuing higher temperatures would keep pressure on supply and prices, which were already at record highs. In W20, Italian extra virgin olive oil reached USD 7.56/kg, Greek oil exceeded USD 6.48/kg, and Spanish oils are approaching the same price. The main culprit for the rise in prices is ongoing climatic disasters which negatively impact production volumes. Droughts and extreme weather phenomena have cut Italian olive oil production by 30% and halved Spanish olive oil production for the 2022/23 season.

Similarly, the price of olive oil in New Zealand increased to USD 6,000/MT in 2023, the highest since 1997 when the price was USD 6225/MT, and is expected to continue rising due to a bad harvest in the Mediterranean region, particularly in Spain. Only 10% of the olive oil consumed in New Zealand annually is domestically produced. In Turkey, from January to April, olive and olive oil exports reached a record high of USD 377.01M. The main export destination was Spain, worth USD 130.70M, a significant increase from USD 7M in 2022. The production of olive oil in Rio Grande do Sul, Brazil, which was 450K litres in 2022, is expected to increase to 500K litres in 2023 due to rising demand. The goal is to keep Rio Grande do Sul as the top producer, accounting for 75% of production, followed by Minas Gerais São Paulo. To put pressure on the US to remove its taxes on some imports of Spanish table olives, the EU has opened a compliance process at the WTO. The decision comes eighteen months after the WTO ruled that the US tariffs violated international rules and four months after US action intended to comply with the ruling. Lastly, in the US, according to the Olive Oil Commission of California, the state produced 7.34M litres of olive oil in 2022/23, 20% below the rolling five-year average.