W25: Olive & Olive Oil Update

In W25 in the olive and olive oil landscape, a deadly pathogen called Xylella fastidiosa is causing significant economic damage in the olive oil industry in Europe, estimated to be over USD 21.81 billion. The pathogen has already killed numerous olive trees in Italy and now poses a potential threat to olive plantations in Spain and Greece. Spread by insects, this bacterium may lead to an increase in the cost of olive oil for consumers. The production of olive oil has significantly declined in both Italy and Spain. Italy has experienced a nearly 30% loss in production in 2023, while Spain, the world's largest producer, has seen its quantities cut in half. The initial setback due to the Russian-Ukrainian conflict was further aggravated by persistent drought in 2022, followed by extreme weather events, including heavy rainfall. These circumstances have raised concerns about the shortage of raw materials and pose significant challenges for the entire Mediterranean region. As of May 31, 2023, Italian olive oil stocks were 18.7% lower YoY and 8.2% lower MoM. This is mainly due to the 21.0% decrease in extra virgin olive oil (EVOO) and the 29.3% decrease in olive pomace oil. However, There was an increase in the stocks of olive oil and refined olive oil by around 6.7% and of lampante olive oil by 6.2%. Additionally, as of May 31, Italy had 255,181 mt of olive oil in stock, with EVOO accounting for 73.0% of the total. Among the EVOO stocks, 48.9% are of Italian origin (91,143 mt), followed by 41.4% of Community origin. Virgin olive oil represents a mere 1.8% of the total stocks.

Southern Italy stores 46.8% of the national olive oil supply, with the main contributions originating from the regions of Apulia and Calabria at 30.6% and 8.3%, respectively. At the provincial level, Bari holds 17.7% of the stock, while Perugia holds 10.7%. In May, the price of olive oil in Italy increased by 24.6% YoY. Lastly, China currently imports 90% of its olive oil from Spain and with potential for future growth in this market. The Spanish Olive Oil Interprofessional has launched a new wave of its promotional campaign, "Olive Oils from Spain" in Beijing.  In Spain, pomace olive oil prices have snapped some gains and advanced on that trajectory since the first week of June. The Tridge crude pomace oil from Jaén has gained 7% to start the week at USD 142.19/kg. Lower levels of olive oil stocks this year compared to the 2021/22 marketing year and continuously poor harvests are keeping the olive oil market very tight.