Olive oil will remain expensive, at least for the next six months. And this is the optimistic prediction. Whether the “rally” will continue will become clear in the first months of 2024, when the new harvest olive oil enters the market, even if, according to all indications, production will be reduced, or next spring, when there will be the first indications of the production of the new growing season, especially in Spain.
1 million tons missing
The estimate that there will be a global supply shortfall of almost 1 million tons in the next trading season 2023/24, at a time when stocks are at an all-time low, creates serious uncertainty about where the “ceiling” of increases in producer prices. Already in the market there is talk of 9 and even 10 euros/kg, a development that will once again catapult the retail price lists.
In September the price of olive oil on supermarket shelves was 20.8% higher than a year earlier, according to ELSTAT data, while extra virgin olive oil is currently retailing at an average of 12 euros per litre.
Off the charts
It is characteristic that producer prices have currently exceeded 9 euros in Italy and 8.50 euros in Spain, while in our country the industry buys at a price of 8.5 – 8.7 euros/kg from producers according to Mr. Konstantinos Koutsioubis, president of the Association of Greek Olive Oil Standardization Industries (SEVITEL).
Such is the situation, market players say, that last week a large brand of extra virgin olive oil was missing from supermarket shelves, as there was no raw material.
Regarding the production of the new olive growing season 2023/24 in the country, according to the president of the National Interprofessional Olive Oil Organization (EDOE), Mr. Manolis Giannoulis, it is estimated at 160,000 tons, from 350 thousand tons in the 2022/23 season and 160 thousand .tons in the 2021/22 season.
Exports and risks
Exports are on the rise, but the global share of Greek olive oil is minimal.
At the same time, skepticism also prevails in the sector’s export companies, as high prices create risks that standardized Greek olive oil will lose its appeal, especially in an environment of generalized inflation.
Greek exports of standardized olive oil have doubled in the last 10 years, reaching levels of 40,000 tons annually. In fact, the industry estimates that in the next 2 to 3 years exports of standardized olive oil may increase by an additional 20%.
But because the devil is in the details, the upward trend of branded Greek olive oil does not correspond to production.
“Although 10% of the world’s olive oil production is produced in Greece, the market share of Greek olive oil in foreign markets is 2%-3%,” says Fotis Sousalis, vice president of the Association of Olive Oil Standardizers of Crete (SYTEK).
The market share
In some countries, however, the market share of Greek olive oil is relatively high, such as in Germany (14%), Poland (12%) and Belgium (5%). But not in the USA, where orders for extra virgin are expected to nab a share of 35% this year, while a further increase, to 37%, is predicted for 2024. It is characteristic that apart from the pioneers Italy and Spain, Portugal has twice share of exports to the US relative to Greece.
On the contrary, the amount of Greek olive oil exported in bulk is much larger, as 60-100 thousand tons – depending on the production of each year – “leave” in barrels, mainly to Italy.
Loss of goodwill
This means a loss of significant surplus value, since “the benefit for the economy from the export of standardized olive oil is 1.5 euros/kg” notes Mr. Sousalis.
Based on data from a study by the National Bank, in 2022 bulk Greek olive oil was exported at an average price of 3.8 euros/kg, while standardized olive oil at 5.1 euros/kg.
It is noted that in the eight months of this year, oils were the category that recorded the largest increase in exports, which is naturally linked to the large price increase due to shortages in Spanish olive oil. The value of exports of this category in the period January – August 2023 more than doubled (+107.3%).