You can still see oil bottles with alarms on supermarket shelves. Oil prices continue their upward trendAccording to data compiled by the Ministry of Agriculture, Fisheries and Food, there was an average increase of 74.5 percent compared to the same week of the previous campaign and 176 percent compared to the last two years. And no surprises are expected this year, at least if the drought continues. “Until that time, The increase in prices continues without any possibility of change“In a company report on the Spanish olive sector, Solunion says María Ángeles Piñero, coordinator of analysts in the southern region of Spain. If the rains finally come, “there may be a relaxation in prices from May or June due to fear.” and a decrease in stock values.” This is the second campaign the industry has recorded with lower production and an unprecedented increase in final price offers.
The forecast is based on industry production data. For the current campaign15 percent more production is expectedEven though it is up to 765,000 tons, it is still 34% below the average of the last four years. However, stocks will be 48% lower (257,000 tons) compared to the average of the last four campaigns. Increase in imports for supply marketing. In terms of volume, olive oil imports this year remained stable, even if slightly lower than the amount imported in the medium or high production campaign, as in the previous one. This is due to factors such as the indefinite ban on bulk olive oil exports in Turkey in August 2023 or the sharp increase in export tariffs in Morocco since October 2023, but has managed to maintain the high stock level from 2021/2022. The amount of imports and marketing from Spain exceeds production.
The same thing did not happen with exports. International sales of Spanish ‘liquid gold’ fall 34% in latest campaign Due to high prices, the increase reached 74.4% to 6.8 euro/litre. “Bottled oil sales have shown greater dependence abroad compared to bulk oil, which is subject to greater impact of price evolution,” Piñero says. Despite this, price elasticity of demand for olive oil has been observed in developing markets and countries such as Asia, where purchasing power is less and there is less information about this product. For example, as of September 2023, sales volume in China decreased by 74%, while in South Korea this decrease was 65%.
White brands are becoming more expensive
In the dispute between olive oil brands, distributors were blamed for the alleged lack of decline in sales. white label price increase. While the average difference between both types of packaging decreased from 12% to 9%, sunflower oil was the biggest winner of this increase due to the decrease in prices last year. “Brand companies run promotions to attract supply and maintain quotas and try to maintain unit margin,” the report emphasizes.
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In the midst of a cost spiral, industrial companies often packaging machineswe are facing a situation Complex transfer of prices to distribution due to decline in volumes and operating margins. Adding to these challenges is the sharp increase in financial costs due to the rise in interest rates in the Eurozone to 4.5% and the increased need for working capital financing. At the same time, last year an increase in the level of defaults was observed due to the increase in the origin price of oil, but the volume remained low compared to the average.
The prolongation of the drought, together with high temperatures and extreme weather events, caused the industry to evolve towards the high prices seen in supermarkets. 76% of the surface consists of rain-fed farms. The adverse climate is combined with other negative factors such as the aging of farmers and the lack of renewal of generations. The report states: ” I bet with you irrigated crops and will increase intensive productivity efficiency “In this way, yield fluctuations are prevented.” Thus, as much olives could be produced in 1 hectare as in traditional plantations of 5 hectares.