W8 Olive and Olive Oil Update: Stability in Italian Olive Oil Prices Amidst Declining Stocks, While Conflict and Climate Challenges Devastated Lebanon's Production

Olive Oil Production Faces Challenges Amidst Global Vegetable Oil Growth

Over the last decade, global vegetable oil production has consistently risen, with the exception of olive oil, which experienced a decline. Global vegetable oil production reached nearly 223 million metric tons (mmt) in 2023/24 compared to 176.4 mmt in 2015/16. This growth is due to the increasing global population and the expanding use of vegetable oils in the biodiesel industry. Approximately 70% of vegetable oil production is utilized for food, while the remaining 30% is for industrial purposes.

WTO Rules in Favor of EU in Dispute Over US Duties on Spanish Black Olives

The World Trade Organization (WTO) has ruled in favor of the European Union (EU) in a lawsuit against the United States (US) regarding Spanish black olives. The US failed to implement a previous ruling that deemed its anti-subsidy duties on Spanish black olives inconsistent with WTO rules. The US is now required to promptly remove the duties, which were imposed in 2018 and ranged between 30 and 44%. Previously the largest exporter of black olives to the US, Spain saw a significant decline in exports after the duties were imposed, dropping from USD 67 million in 2017 to USD 20 million in 2022.

Italian Olive Oil Prices Stabilized Amid Decreasing Stocks and Production

Olive oil prices in Italy have stabilized recently, with the average extra virgin olive oil price at USD 10.37 per kilogram (kg) and organic extra virgin olive oil at USD 11.40/kg. Both Bari and Milan commodity exchanges indicate price stability as of February 20, 2024. However, Italian olive oil stocks have decreased to 203.55 thousand metric tons (mt) by January 31, 2024, compared to 236.49 thousand mt on January 31, 2023. Additionally, Italian olive oil production is declining due to the abandonment of olive groves in the country.

Greek Olive Oil Yield Falls Short Amid Adverse Weather

The olive oil yield in Greece for the 'off-year' harvest is estimated to fall below the initial projection of 200 thousand mt, ranging between 150 and 170 thousand mt due to adverse weather conditions. Production data from the European Commission (EC) indicate a poor crop of 175 thousand mt, the lowest in six years, contrasting sharply with last year's bumper harvest of around 340 thousand mt. Producers attribute this decline to one of the worst harvests in the past 30 years, with reduced quantity and quality issues caused by problems with the olive fruit fly, resulting in only 70% of the oil being classified as extra virgin.

Lebanon's Olive Oil Production Plummets Amid Conflict and Climate Challenges

Adverse weather conditions exacerbated by climate change and escalating tensions along its southern border with Israel have severely impacted Lebanon’s 2023/24 olive oil production. Initially estimated to produce 18 thousand mt of olive oil, local producers now anticipate a significantly lower yield due to the challenges posed by the conflict. Israeli bombings have caused widespread destruction, with at least 386 fires destroying close to 50 thousand olive trees. Estimates suggest a total of 47 thousand olive trees were destroyed, leaving many displaced and unable to harvest the remaining crop.

Türkiye's Ambitious Olive Production Goals Amidst Seasonal Challenges

Türkiye achieved record-breaking figures in the 2022/23 season, producing 407 thousand mt of olive oil and 938 thousand mt of table olives. However, the current season's production is estimated to be around half of this amount due to periodicity. Despite this, Türkiye aims to maintain its leading position globally, surpassing Spain.