olive products market report summary

OLIVE PRODUCTS MARKET REPORT SUMMARY No 36 – February 2010

MARKET COMMENTARY

Source: International Olive Council page 1

WORLD OLIVE OIL PRODUCTION Developments in 2009/10 When it met for its 97th session in November 2009 the IOC Council of Members discussed the provisional figures for the 2009/10 crop year. Since then, the figures have changed quite a lot. By the end of January, the Agencia Española para el Aceite de Oliva (Spanish Olive Oil Agency) was speaking of a figure of 858 100 t for Spain’s olive oil production. Bad weather will prevent it from reaching the initial estimate of 1 200 000 t. The figures for the rest of the producing countries in Europe have also oscillated. Greece expects its production to be 48 000 t lower (-14%) than the initial estimate of 348 000 t whereas Portugal expects to produce 60 000 t more than first thought (+20%). On the other hand, production in France holds steady at the estimated level of 5 000 t. Outside Europe, Israel expects its harvest to be 14.3% lower. In contrast, the prospects in Morocco are for production to hit a record level thanks to good weather conditions leading to significantly higher yields in most of the country’s regions, with production hitting 160 000 t , i.e. 65 000 t more than initially expected (+68%). With an estimated total tonnage of 145 000 t (+4%), Tunisia too looks set to produce more than expected. CHIEF TRADING INDICATORS Review of trading movements inside the European Union (intra-EU) point to a decline of approximately 30% in Spanish deliveries, particularly to Italy. This review is important in tracking the world market because of the market position of Italy and its reliance on purchases from Spain for its exports to third countries. In the first two months of 2009/10 Spanish, intra-EU deliveries of virgin olive oil (heading 15 09 10) and refined olive oils and blends (heading 15 09 90) fell from previous-season levels to 63 492.3 t (-28.1%) and 12 208.8 t respectively (-32.6%). Strikingly, virgin olive oil’s percentage share of deliveries to Italy is climbing, going up from 49.2% to 59.4%, although in absolute terms it has dropped by 5 685.9 t to 37 741.3 t. Conversely, the share of refined olive oils and blends is narrowing from 47% to 40% (4 870.7 t) (source: EUROSTAT). Trading movements outside the European Union (extra-EU) point to a small rise in exports, except for exports from Italy to the United States, and a small increase in imports (except from Tunisia). In the first two months of the crop year, the EU exported 26 937.6 t of virgin olive oil (heading 15 09 10) to third countries compared with 25 480.5 t a year earlier, thus recording an increase of 5.7% in total exports. Italy accounted for 76.6% of this tonnage, versus 89.5% the year before. On the other hand, sales to the top outlet (USA) dropped by 22.8% in the first two months of the crop year from 20 826.1 t (65.6% sold by Italy) to 16 085 t (69.5% by Italy). The heaviest drop was recorded in October 2009 (57.3% of EU exports versus 71% a year earlier) with sales down by 37.2% compared with a drop of only 1.3% in November when the market share had almost been regained, lying at 70% instead of 71%. Year-on-year FOB prices to the USA show a decrease of 3.25% in October 2009 and 14.9% in November 2009, falling to €3.27/kg and €3.36/kg respectively. The FOB prices calculated for other destinations were much higher (€8.26/kg in October 2009 and €9.38/kg in November 2009), probably reflecting special circumstances. Over the same period exports of refined olive oils and blends under customs heading 15 09 90 came to 14 843.3 t, up by 1 200.6 t on the year before. In contrast, exports to the USA fell from 11 187.6 t in October and November 2008 to 6 542 t one year later (i.e. a decrease of 41.5%, much more pronounced than in the case of virgin olive oil). Compared with a year earlier, FOB prices to the USA dropped by 3.35% in October and 3.38% in November to reach €2.88/kg and €3.14/kg respectively (source EUROSTAT). In the first two months of the 2009/10 crop year the EU imported 8 536.3 t of virgin olive oil (heading 15.09.10), of which 84.4% was from Tunisia. This figure shows an increase of 2.4% on season-before imports and a 3.2% decrease in the share of Tunisia. In October 2009 imports from Tunisia fetched prices of €2.26/kg and €2.34/kg from other countries. This translates into respective contractions of 10.3% and 24.3% against October 2008. In November, prices climbed to €2.47/kg for imports from Tunisia and €2.57/kg from other countries, thus going down by 0.4% and 7.2% from the respective levels of November 2008. It seems that if Tunisia sells its oil cheaper, it holds out better against decreases and recovers more quickly. During the same period the EU imported 1 850 t of refined olive oil and blends (heading 15 09 90) versus 788.4 t a year earlier. However, while Tunisia supplied 73% of these purchases in 2008, its sales came to a complete halt in 2009 (source EUROSTAT).


MARKET COMMENTARY


On the six main import markets listed below trading in olive oil between July and November 2009 increased by 7 821 t (+1%) compared with the same period the year before and by 4 730.3 t in the first months of the new season (+2%). Olive oil imports (including olive-pomace oils) (t)

MOVEMENTS IN PRODUCER PRICES Graphs 1 and 2 track the weekly movements in the producer prices paid for extra virgin olive oil and refined olive oil in the top producing countries of the European Union. The monthly price movements for the same two grades of oil and refined olive-pomace oils are shown in Graphs 3, 4 and 5 respectively At the end of February:

The prices paid for extra virgin olive oil were 18% higher than the same period a year ago in Spain (€2.20/kg), 10% higher in Greece (€2.04/kg) and 14% higher in Italy (€2.26/kg) (Graph 1)

The same comparison for refined olive oil shows a rise of 4% in Spain and 2% in Italy (Graph 2).

Graph 1


MARKET COMMENTARY


Graph 2

Graph 3


MARKET COMMENTARY


Graph 4

Graph 5

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