A commodity is a raw material or primary agricultural product that can be bought and sold. Commodity items often will display little-changing market demand, which does not fluctuate with variations in price. In other words, it is a raw material or a product that people “need", not just want.

Let's look at a quick example: gasoline is an everyday commodity item that everyone has experienced. The price fluctuates daily, entirely outside of your control. Whether the price goes up or down, you'll continue to need gas for your car. Since most people don't have a great way to "stock up," you will end up buying it when your tank runs low no matter the cost that day.

When it comes to the constant market fluctuations of bulk olive oil, global production (aka, how much olive oil is available in the world) plays a central part. However, there’s one more important thing to factor in: the strength of the euro.

The USDA recently released a report on oilseeds and production, which included a small feature on expectations of the upcoming 2017/2018 olive oil harvest.

Today, I'd like to go through their report, piece by piece, and add some commentary in that will be helpful to fully understand what they are saying and how it may affect your 2018 bulk olive oil buying plans.

Everyone’s been feeling the pressure on the olive oil market this year. It’s been a really tough market in 2017, with a delay in the olive harvest that pushed oil production out far later than usual, and was coupled with high and ever-rising prices throughout the spring.

Today, I’d like to do a brief review as we prep for next year’s harvest to begin in the coming months. First, I’m going to cover some numbers and percentages that we saw this last year across the globe. Then we’ll finish up with some personal insight on this market as we look forward towards next year.

Timing of contracts can be key, and most people at this point know that I’m a proponent of contracting your oil needs out each year.

This is your official notice that if you’re thinking about locking in a contract for your 2018 canola needs — be it RBD canola, non-GMO expeller pressed canola or organic canola oil, this fall is a great time. In fact, it’s one of the most common time to sign seed oil contracts. Why? Let me explain.

Staying on top of the CBOT market on a regular basis can be a daunting task for those that don’t have to do it as a daily part of their job.

As the soybean market changes, it affects the price of soybean oil, canola oil and other oils that are dependent on the soybean board. Fluctuations on a daily or weekly basis can make a significant impact on your bottom line.

Having a bit of perspective as you’re tracking your prices as they go up or down can be very helpful. That’s what I’m providing today: a bit of perspective over time.

The following are graphs from the last year, 5 years, 10 years, 15 years, 20 years, 25 years and 30 years

If you buy commodity oils, sometimes understanding the pricing and how it is structured is a sigh of relief. It’s based off the CBOT, which is public information you can check to understand how your costs are changing and why.

The olive oil market historically hasn’t been so easy. That’s because it’s not really a commodity oil, but in the bulk world it often works as such.

Most people assume that to save the most money on their bulk oil ingredients, that they should be contracting their oil at an ideal time. The answer is, as always, more complex than that. Chances are that if you are booking canola or soy (or an oil that is based off those markets) that a year-long contracted price may be more expensive than the current spot market.

And just why is this? We’d like to walk you through some of the reasoning behind this — it all has to do with the CBOT, and how future bookings work.

Looking for an update on the olive oil harvest that’s happening this winter?

Whether you’re preparing to book olive oil contracts for the next year, looking at price predictions or wondering where the olive oil market is going to go in the near future, this update is for you.

This article will be an update on the olive oil market, as you may have contracts that you are considering locking in for 2017.  This will be most pertinant to any buyers who contract their olive oil throughout the year (and in turn use the volumes that allows them to do so).

The timeframe that you will officially secure these contracts is often dependent on the status of the olive oil market, so it’s helpful to keep up-to-date throughout November and December as you are doing your planning and booking.

It’s no surprise to hear that organic products are in high demand. So it only goes to say that organic ingredients that make up those products are in high demand too.

But can the supply keep up with this growing demand?

These big questions related to the organic supply chain are front-of-mind for many natural food manufacturers like you: Can your growing demand for organic ingredients be met? Can the supply chain keep up? And will you run into any ingredient shortages?

To be able to make smart decisions about your supply chain, you have to look at the availability of the different oil ingredients you may use. I thought today would be interesting to take a look at the data on which oils have the highest global production, and see which have gone up and which have gone down over time.

The USDA Foreign Agriculture Service provides an online tool which allows us to track the availability of different oils within a particular country or around the world. You can see information like total supply, imports, exports, production, crush, etc.

Analyzing this information allows us to glean some data and make smart decisions about future oil purchases.

A key part of R&D’s role is choosing the right ingredients for the job. If you (or your marketing team) is set on using olive oil, you will need to decide which grade is right for what you’re trying to accomplish.

Two of the most common grades are Extra Virgin Olive Oil and Pure Olive Oil (also called just ‘Olive Oil’).

There are a few key differences between these two types of olive oil when you look at them from your R&D or corporate chef’s eye’s. There’s also a few differences in how these grades are priced, which you should understand if you’re on the purchasing side of things.

With the new olive oil harvest approaching this winter, prices may go down but don’t expect too much of a decrease. In fact, with current global olive oil levels (including next year's predicted harvest and any supply left over from last year) prices may stay about the same as last year.

At the International Olive Council meeting in September 2015, members discussed the final tallies from the last harvest and looked forward to their expectations for the next harvest.

Projections for 2015/16 are still unsteady and appear to be offered as an estimate but without too much conviction. They expect that production will be looking up from last year, but will not be as good as the year prior. This is, the IOC reminds us, as long as weather conditions don’t change too much between now and the key part of the harvest (December 2015).

This graph is a great representation of the fluctuations in the market over the last 10 years.  

All of us in the olive oil sector are excitedly waiting for the next harvest season this winter.

This last years harvest (October 2014 - January 2015) was substantially down from the year prior, and we’ve seen both lack of supply and a resulting increase in prices over this spring and summer.

Every year, olive oil prices are at their lowest between December-January, at the peak of the harvest season. Over the spring and summer, prices continue to slowly rise as the world’s olive oil inventory is used up. In the middle of September, Spain officially announces what their next year’s harvest is going to look like (this matters because they are the world’s price driver), and prices either jump up or drop down accordingly.

Because of this annual cycle, olive oil prices in the summer are often high and many olive oil users look forward to the next season with fingers cross for a good year.