Friday, July 19, 2024

Promising Outlook for Olive Oil Production in 2024/25

A global production of 3,200,000 tons restores the normal averages of the past, which will push market prices lower than today's levels

At the recent 4E General Assembly, a key highlight was the address by Dr. Dimitra Aliefs (Economist PhD, expert in international olive oil trade, founding member of the organization), who provided the first estimates for the 2024/25 global olive oil harvest. Her speech offered a detailed forecast, signaling a potentially robust production year following three years of drought. Here is a comprehensive summary of her insights.

Anticipated Olive Oil Production by Country

Spain

Spain is expected to produce between 1.2 and 1.7 million tons of olive oil, with a median estimate of around 1.4 million tons. This marks a significant recovery and positions Spain as a leading contributor to global supply.

Greece

Greece’s production is projected to reach between 280,000 and 290,000 tons almost double than last year’s harvest.

Italy

Following a strong previous year, Italy’s production is anticipated to be slightly lower, around 280,000 tons. This reflects a typical cyclical variation in agricultural yields.

Portugal

Portugal, closely following Spain’s example on the Iberian Peninsula, is aiming for a production of up to 200,000 tons, potentially rivaling Greece in the fresh olive oil market.

Tunisia

Tunisia projects a yield of 260,000 to 270,000 tons. However, there are concerns about the strength of its olive trees, which could impact the final output.

Morocco

Despite its proximity to Spain, Morocco’s estimates are less favorable, likely due to ongoing water scarcity issues.

Türkiye

Türkiye is expected to produce at least 250,000 tons, possibly reaching up to 270,000 tons. Some Turkish sources even suggest an optimistic estimate of 400,000 tons.

Global Production and Market Impact

The cumulative global production for the 2024/25 marketing year is forecasted to reach approximately 3.2 million tons, a return to historical averages. This anticipated increase in supply is likely to exert downward pressure on prices. Initial futures market activities suggest a trend towards lower prices, with wholesale prices possibly approaching €5 or slighly lower per kilo by January 2025, contingent on stable weather conditions.

Market Stability and Consumer Trends

The anticipated price stabilization at around €5 per kilo is seen as a balanced level, ensuring fair returns for olive growers while maintaining affordability for consumers. However, the industry faces challenges in reclaiming market share lost to seed oils over the past two years, during which olive oil sales declined by 40%. Efforts to re-educate consumers and regain their preference for olive oil will require substantial marketing and patience.

Current Stock Levels and Future Projections

Presently, global olive oil stocks are low, and market dynamics reflect a trend of  stock depletion. Despite the limited availability, the market remains in a state of flux, with significant selling activity. Türkiye’s ongoing export restrictions, since July last year, have further complicated the situation. The eventual lifting of these restrictions is expected to cause significant market adjustments.

Conclusion

In summary, following two challenging years, the 2024/25 marketing year brings hope for a balance between supply and demand, at a lower price level. This presents a valuable opportunity to win back consumers who had switched to seed oils. As the legendary B.B. King might say, “The thrill is gone!” but a new era of stability and optimism is on the horizon.

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