W21: Olive & Olive Oil Update

In W21, in the olive and olive oil landscape, worldwide consumption in the 2023/24 season is predicted to rebound to 2.9MMT. Olive oil is considered a premium vegetable oil, so the recovery in consumption will be slower in the price-sensitive countries of the Middle East and North Africa, which continue to face food inflation and high prices. Olive oil exports from Turkey are expected to fall from historic highs to 160K MT, while US imports are forecast to remain unchanged at 400K MT. The US, the largest importer, will account for a third of world trade in the 2023/24 season. In Italy, producers fear not being able to guarantee their products to customers in the upcoming months due to the shortage of olive oil. This results from the disastrous 2023 olive crop, impacted by droughts, extreme weather, and rising production costs. Italian olive oil production fell by 30% in the 2022/23 growing season. The ongoing drought in Spain and a large portion of the Mediterranean is predicted to make things worse, according to the initial forecasts for the upcoming olive oil campaign. From January-March, 2023, the Andalusia region in Spain exported 140.2K MT of olive oil worth USD 717.21M, an increase of 3.8% YoY from the corresponding period in 2022. Only in March, the Andalusian sector's olive oil export increased 28.8% YoY to USD 284.96M.

The Portuguese government issued an order to temporarily ban the cultivation of olives, avocados, and red berries in the Alentejo and Algarve provinces, which have been hardest hit by the extreme drought. As the cultivation of olives and avocados requires a lot of water, the government encourages the cultivation of crops that use less water. Producing up to 2M litres of olive oil annually, against the global output of over 3MMT, means it may take time for South Africa to compete with big brands. But given that some of the world's traditional suppliers in Europe are struggling due to droughts and recurrent heatwaves, South Africa may start to position itself for the export market. Brazil's consumption of olive oil increased by 31%, from 76K MT in 2017/18 to 100K MT in 2021/22. Brazil stands out as a significant olive oil importer, with an annual production of 3.5K MT. The national production, however, only covers roughly 5% of this consumption. Brazil received USD 2.1M worth of olive oil shipments from Turkey in 2022, an increase of 606% YoY. Lastly, Turkish Gemlik olives have been registered with the European Commission, and as of May 28, Gemlik olives will become an officially recognised product in the EU.