The 2013/14 Harvest Season in Spain
As mentioned in prior commodity market updates, Spain has had a bumper harvest this last season (October 2013-February 2014), in comparison to the prior harvest season of 2012/13. Most of us have felt the affects of this already.
In review, Spain had an even better harvest than predicted, with record volumes of olive oil produced (1,752,100 tons in Spain alone). This reflects an increase of 16% in comparison to the prior harvest year of 2012/13. Spain continues to lead as the world's largest producer of olive oils.
The total global production of for the 2013/14 harvest year was assessed around 3,150,000 tons.
As we speak, predictions for the next harvest are beginning to surface, and olive oil users and producers are on alert. Keep reading for more info on the next harvest and helpful resources.
Exports from Spain
With this most recent harvest, Spain has seen an increase in exports, both to countries inside and outside of the European Union (EU). In total, 562,824 tons of olive oil were exported between October 2013-March 2014, which is a 64% increase from the same period in 2013.
Of these exports, the majority of the olive oil was shipped within the EU; a total of 401,725 tons or 71% of the total Spanish olive oil exports. Of the oil shipped to EU countries, the most common importers were Italy, Portugal, France and the UK.
What does this mean? Because Spain has had a good year, and other producing countries have had a less abundant harvest, many are importing oil from Spain to support their sales, export needs, and/or their own population's consumption.
Exports from Spain to Italy
247,863 tons of olive oil traveled from Spain to Italy. This means that 44% of all of the olive oil that is exported from Spain travels directly to Italy. In other words, 7.8% of all the olive oil pressed in Spain this year was shipped to Italy.
What does this mean? This is an interesting conversation for another day-- because Italy consumes much of what it produces and becuase Italian oil is in such high demand around the world, much of oil shipped out of Italy originally comes from other countries like Spain.
Exports from Spain to the US
In the first 6 months of the harvest (Oct 2013-March 2014), exports from Spain to the US totalled 58,650 tons of olive oil. This is an increase of 140% from the same period a year before during the challenging Spanish harvest of 2012/13.
What does this mean? More of the olive oil now traveling to the US is of Spanish origin, because the prices are lower and more stable after this last harvest.
Olive Oil Imports to the US
Olive oil imports coming from all producing countries in April 2014 increased by 37.2% as compared to April 2013.
However, when looking at a longer time period, there is virtually no change in imported olive oil volumes. If you compare the level of olive oil imports from all countries in October 12'-March 13' vs. October 13'-March 14', numbers are very close.
What does this mean? The US population is not consuming more olive oil, even as the prices are going back down.
Producer Prices By Country
As of early summer 2014, here is the where the producer prices (average prices from the olive oil manufacturing mills) stood, for purposes of comparing rates between multiple countries of origin.
IMPORTANT: Small fluctuations in rate changes do not necessarily affect Centra Foods' customers, as we lock in contracts at optimal times. However, they are useful to reviewing larger trends. For current pricing information, please contact us directly.
Olive Oil Producer Prices In Spain
Prices began to climb in the first few weeks of June, perhaps in reaction to forecasts of a smaller harvest for next year. By the last week in June, Extra Virgin Olive Oil prices stood at €2.16 /kg. In comparison, this is 22% lower than the same period last year. The price of Refined Olive Oil, likewise, rose to €2.07 /kg by the end of June, which is 16% lower than the same period last year.
In recent weeks, it is rumored that many mills have witheld securing new contracts, while they learn more about what the next harvest season will look like. This relucance to sell can affect prices by dropping the supply available and causing prices to rise. This is a very common trend prior to harvest season, coupled with the actual decrease in supply as inventory from the last harvest is used up.
What does this mean? These trends don't immediately affect you as a customer if your supplier locks in their own supply contracts at optimal times, like Centra Foods. However, if you purchase containers directly from overseas or you are looking to sign a supply contract at this time, this can negatively affect your supply chain and/or prices. In the long run, the overall commodity market will affect all olive oil users.
Olive Oil Producer Prices In Italy
In recent months, producer prices in Italy have continued to rise. In the first three weeks of June, prices reached €3.67 /kg, a 17% price increase from the same period the year before.
What does this mean? Italy has had a smaller crop this year, which has increased their prices. Also, compare Italian rates to Spanish, and keep in mind that some of the Italian oil actually originates from Spain. If you are a manufacturer, this is a key example of why it's better to use any origin of bulk olive oil.
Olive Oil Producer Prices In Greece
Prices are more stable in Greece. Earlier in the spring, prices reached a high of €2.61 /kg. However, in June 2014, they held steady at around €2.49 /kg, which is 1% above the level in the same period of the previous crop year.
What does this mean? Prices are typically higher in Greece, as their production yeilds are consistently lower. Right now, production and prices remain reasonably stable.
Olive Oil Producer Prices In Tunisia
Prices rested aroun €2.53 /kg in Tunisia by the end of June 2014. This is a decrease of 11% in comparison to the year before.
What does this mean? Tunisia has had lower production levels this year, which would normally drive prices up. However, the prices have reduced in an effort to match Spain's lower rates this year and maintain their exporting levels. Tunisia was a major player in the 2012/13 harvest when Spain's production was reduced by 50%; they supplied much of the olive oil that Spain did not, with prices matching (or just below) Spain's. This years prices, however, remain higher than Spain's due to the desparity in production levels.
Review & Predictions For The Olive Oil Market
Overall, prices have been very steady throughout the spring. Many olive oil buyers saw their prices reduced at the end of winter/beginning of spring. This has held steady for a number of months.
Producer Prices Have Begun To Rise
Producer prices have begun to rise in anticipation of the next harvest. This is a very common thing that we see each year, in all different types of bulk oils.
It is still unknown what the next olive harvest will bring, or what production levels will look like. However, rumors of a poor harvest have begun to surface. This article was recently released by the Olive Oil Times. It is a very worthwhile read if you are preparing for next season. Actual harvest production for next season is still unknown.
Will You See Price Fluctuations?
If you are a current Centra Foods' customer, will you be affected by this increase? Mostly likely not in the next month, but the answer also depends on the volumes that you purchase.
As a supplier, Centra Foods strategically buys and contracts with overseas producers based on the commodity market. This allows us to lock in contracts when prices are ideal-- it's all a part of helping our customers buy smart and avoid market fluctuations when possible.
However, as we approach the next harvest, we will continue to be affected by overall production levels and market movement-- all suppliers and users of olive oil are always affected by the commodity market. More information on this is unknown at the moment.
We Suggest Supply Contracts
As a customer (if your volumes permit), it is in your favor to look forward into the future to help prepare for times like this. Looking forward and working with your supplier can help you lock in prices and reserve inventory. Most years, forward contracts in the fall, winter and spring are ideal for olive oil, so begin to compile your internal numbers and needs for the future now.
Want more reasons to sign a supply contract? Here are the top 4 benefits of signing a supply contract for olive oil.
Information Source: International Olive Council
Topics: Harvest/Commodity Market
