Production falls, will prices go up (and when)?

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The continuous drought of the past three months has changed the expectations of the forecasted olive oil production in Greece. While the initial estimations were at 300 thousand tons, we are now looking at 240.

Similar developments appear in Spain, where the forecasted production has dropped from 1.35 million tons to 1.0 – 1.1 million tons.

Expectations, however, remain high for Tunisia (300 – 330 th. tons), Italy (290 – 310 th. tons), Turkey (170 – 180 th. tons), Portugal (120 – 140 th. tons) and Syria (90 – 100 th. tons).

Therefore, in contrast to last year 2018/19, the general picture for 2019/20 can be described by balance.

*** The significantly reduced Spanish production will be offset by its high reserves of about 700 th. tons, along with the generous productions of other Mediterranean countries.

The Greek Map

According to the exclusive and reliable information and estimations of olivenews.gr, the detailed forecast for the Greek production of olive oil is as follows (in thousand tons):

Min. Production (ton.) Max. Production (ton.) Avg. (ton.)
Peloponnese 88.000 102.000 95.000
Crete 62.000 76.000 69.000
West Greece 30.000 38.000 34.000
North Greece 4.000 8.000 6.000
Center Greece 10.000 14.000 12.000
Lesvos 14.000 18.000 16.000
Rest of Greece 6.000 10.000 8.000
Greece Total 214.000 266.000 240.000

 

Peloponnese in detail:

Min. Production (ton.) Max. Production (ton.) Avg (ton.)
Messinia 34.000 37.000 35.500
Laconia 22.000 24.000 23.000
Ilia 13.000 16.000 14.500
Ahaia 9.000 11.000 10.000
Korinthia 5.000 7.000 6.000
Argolida 3.000 4.000 3.500
Arkadia 2.000 3.000 2.500
Peloponnese 88.000 102.000 95.000

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Crete in detail:

Min. Production (ton.) Max. Production (ton.) Avg (ton.)
Iraklio 25.000 30.000 27.500
Hania 19.000 23.000 21.000
Rethimno 9.000 11.000 10.000
Sitia         9.000 12.000 10.500
Crete 62.000 76.000 69.000

[visualizer id=”22722″]

 

Greece in detail:

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[visualizer id=”22727″]

 

In the above mentioned Greek production, an amount of 30 th. tons should be added, from this years’ stock, from which an important portion suffers serious quality issues.

What should be emphasized though, is the spectacular improvement in quality compared to 2018/19. The coming year 2019/20 has been favored by climatic conditions, especially during last winter, with cold weather and bountiful rains. Also, the catastrophic olive flies’ attacks during the summer of 2018 – which cost more than € 200 million – was followed by 2019s’ timely organization and good weather conditions that have minimized relevant impacts.

Price developments

Following the decline of previous estimates for the 2019/20 production, a natural consequence would be that the downward movement of prices could hold back, perhaps with slight upward trends. Furthermore, a wide gap can be seen between the prices of the different quality categories, as a result of the sharp differences in their quality characteristics. Also, by taking into account the late harvest, logically thinking, prices should move slightly upwards by December, just up until Spain begins its full production. Therefore, this year will have a reverse course compared to the previous one, 2018/19, where the forecasts for the Spanish production raised continuously – from 1.4 they reached 1.8 tons – and prices started to fall from autumn 2018.

At this point, a question arises as to whether and when is at the producers’ best interest a slight increase in prices in exchange for a reduction of their production. But this issue is open to a big discussion…

The agronomic and climatic approach

It is not the first time that the promises of great blooming in May to be disproved by September’s fruit setting. This constitutes an even bigger and more serious issue and a great challenge for research and discussion…