Weekly Product Updates

W38: Olive & Olive Oil Update

Olive Oil
Published Sep 28, 2023

In W38 in the olive and olive oil landscape, global olive oil prices have surged to USD 8,900 per metric ton (mt) in Sept-23 due to extreme dry weather in the Mediterranean region, according to the United States Department of Agriculture (USDA). In Aug-23, there was already a significant 130% year-on-year (YoY) increase in olive oil prices, and the USDA anticipates that prices will remain elevated in the near future. Spain, the world's largest olive oil producer and exporter, has been struggling with severe drought conditions, and it recently experienced its third hot summer with temperatures 1.3 degrees Celsius above normal. Spain's olive oil production plummeted to approximately 610 thousand mt in the 2022/23 season, down more than 50% from the usual range of 1.3 million metric tons (mmt) and 1.5 mmt. Similar concerns about production cuts due to dry conditions affecting other major European olive oil producers like Italy and Greece.

The USDA lowered its projection for global olive oil production in 2022/2023 to 2.5 mmt, a decrease from the previous year and the average over the last five years. It anticipates reduced olive oil consumption in producing countries for the same period, except for Turkey, where the government has banned bulk olive oil exports to ensure domestic supply and control rising prices. Consumer preferences in Mediterranean countries are expected to sustain olive oil consumption in the coming years due to entrenched dietary habits. However, countries in northern Africa may decrease their olive oil consumption to increase exports and meet international demand, which has driven up prices. In contrast, the US is expected to see an increase in consumption. While the US typically accounts for about 30% of the global olive oil trade, this is projected to rise to 35 to 37% by 2023/2024.

In Spain, the price of olive oil has surged, ranging from USD 8.4 to 10.58/liter, marking an 8.7% increase in Aug-23. This price hike has contributed to a substantial overall increase of 52% YoY, the most significant annual rise in two decades. Additionally, in Sept-23, olive oil prices in Andalusia, Spain, reached an astonishing USD 9.02/liter, reflecting a staggering 111% YoY increase.

Lastly, preparations for the olive harvest are underway in the Burhaniye district of Balıkesir, a significant olive production center in Turkey. Just before the olive harvest in Burhaniye, there was a rise in wholesale olive oil prices. Meanwhile, in Mersin's Mut district, where the olive harvest has begun, an estimated yield of 130 thousand mt of olives and 10 thousand mt of olive oil is expected from an area covering 29,600 hectares (ha) in 2023. Mut, responsible for 20% of Turkey's olive production, boasts 12.5 million registered olive trees across olive-growing land. Additionally, there are 15 million newly planted olive trees, which include fruitless and unregistered ones, managed by the forest authorities.

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