Markets Economy | Olive oil | Prices

Upsetting the olive oil balance

Vassilis Zambounis
These last few months, the olive oil market is standing still, with almost steady prices and limited transactions.

So, we are talking about a balance that (if we scratch the surface) could be described as "unstable", since it can't be easily maintained, at least in the medium-term, even in the short-term.

The big question is: in case this balance is upset, will the prices rise or decline? On this matter, views are divided.

There is an opinion that the current prices will not last and they will drop. First, because prices are already "too" high, compared to last year, and second, because the cold and rainy weather of past winter, will prepare a good harvest and overproduction for the following period 2017/2018 (I am reffering to the Mediterranean as a whole).

The second opinion says that, on the contrary, prices will rise. Supporters of that view say that the current stock will not last until we reach full production in the coming winter (at least until December 2017). So, even if we have overproduction in 2017/18, in the meantime the bottling industry will face serious shortages.

Consumption seems to withstand current price levels (even with a small decline in the case of Spain), but with the positive resilience of the international market (a fact that is also facilitated by current dollar prices).

This scenario is also supported by carefully reading the "madhouse" (I apologise for the term) current (ex factory) prices are. In Italy, prices are over 6€ ; in Spain, good EVOO is over 4€, while lampante 1° reaches the price of common EVOO, while price in bulk is higher (!) than the retail price!

As we had also pointed out in recent article (in Greek), only Greek olive oil producers are selling in lower prices, even lower than those in Tunisia! In the meantime, retail prices for EVOO is about 8€ .

So, if you ask for my personal intuition, I would say that sooner or later the year 2016/17 will end with a price raise. After all, Greek producers deserve it - at least those who have saved some olive oil in their tanks, provided that they have cared about its good quality (something we missed this year).

PS I must clarify that this is my personal intuition. The author of this article is not responsible for the bussiness decisions and transactions of the readers of this article.

Visitors' comments

  • | Lisa Radinovsky
    I just saw this today and linked to it on my Greek Liquid Gold site, here

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