Olive oil: Turkey may seize on EU price decline

EU prices still shockingly high

Consumers in the EU are still confronted with the effects of the price hikes that were mainly prompted by shortfalls in production in Spain in the past two years. This is vividly illustrated in the evolving price charts for extra virgin oil in Spain, Italy and Greece issued by the European Commission's Directorate-General of Agriculture and Rural Delevelopment (DG AGRI). Although prices have passed their peak since January, when they ranged an extortionate 50% higher than last year, they are still highly elevated. Prices in Spain were still 28% higher than last year at the end of June, more than 30% higher in Italy and more than 35% higher in Greece.

Good news, however, is that prices finally started to dip in Spain in July. Issue is that the prospects for the 2024/2025 crop year, which starts in October, are highly encouraging as table olive yields set to return to normal levels of around 1.4 million mt as local media report. While Spanish extra virgin olive oil prices were still hovering at around EUR 8.00/kg (USD 8.81/kg) in June, they dropped to EUR 7.36/kg in July, which is coming close to the EUR 7.10/kg (USD 7.82/kg) observed in July 2023 as DG Agri illustrates. Encouraging as this development is, it should, however, be noted that prices still have a long way to go before reaching normal levels again. Quotations, in fact, still range more than 50% higher than the five-year moving average of EUR 3.65/kg (USD 4.02/kg). Consumers will, in other words, need to be very patient before any notable price declines reach the supermarket shelves and it is highly questionable in how far prices will return to normal given that retailers and all other players along the supply chain have reaped large profits in the past two years.

Turkey's olive oil exporters seize EU price decline

Exporters in Turkey are also closely monitoring these developments, but with a completely different aim. The Tariş Olive and Olive Oil Agricultural Sales Cooperatives Union expects this trend to continue and bulk olive oil prices to dip to EUR 5.00/mt (USD 5.51/mt), which is a far cry from the peak EUR 14.00/mt (USD 15.42/mt). Although the union will adjust its prices accordingly, it is careful to ensure its members that it does not expect prices to fall below list prices in the new season, unless something unsual happens. The main reason for highlighting the price declines in the EU, however, is that the Union and exporters are pushing for Turkey's export restrictions to be removed sooner rather than later.

Background is that Turkey imposed an export ban for bulk and barreled olive oil as of 1 August 2023. Aim was to avoid the domestic market being confronted with skyrocketing prices. Yet, the ban instead resulted in a supply glut. Although restritions were relaxed last month with a 50,000 mt export quota for bulk and barrel olive oil, which will be effective until 1 October 2024, this is not enough to eliminate the uncertainty in the sector. Representatives are pushing for a complete removal of the ban so that export contracts can be renewed without trouble in the new season. Olive oil stocks, in addition, amount to 150,000 mt and will increase with the new harvest coming in, which not only drive up costs but also the risk of spoilage.

Table olive exports to exceed USD 200 million

For table olives the current season has, by contrast, been a success. Issue is that Turkey's exports increased by 15% in terms of value between October 2023 and July 2024, namely from USD 152 million in 2022/2023 to USD 175 million in 2023/2024, as average export prices surged by 49% from USD 1.80/kg to USD 2,69/kg according to the Aegean Exporters' Association (EİB) and the Aegean Olive and Olive Oil Exporters' Association. Black olive exports thereby generated around USD 136 million and green olive exports USD 39 million.

Contrary to this, the export volume declined by 23% from 84,749 mt in 2022/2023 to 65,325 mt in 2023/2024. Turkey shipped table olives to as many as 116 countries. Germany is the most important export destination (USD 43 million), followed by Iraq (USD 29 million) and Romania (USD 18 million). Confidence prevails that the export value will exceed USD 200 million this season.