Ex-works Spanish extra virgin olive oil has fallen to a three year low, and the crop responsible for it has not been picked yet. The new crop year starts on 1 October, and production expectations across the three largest origins are largely unchanged: Spain at 1.6 to 1.7 million tonnes, Turkey at 500,000 tonnes and Tunisia at 350,000. If those land, combined output from the three rises from roughly 1.98 million tonnes this season to about 2.5 million next, an increase of around 25%.
The market has been trading that arithmetic for months. Old crop supplies are adequate, the potential new crop is large, and weather is the only thing still standing between a forecast and a delivered tonne. Reservoir levels are healthy and tree conditions continue to look good. November, December and January are the three largest crushing months, so there is a long way to run between today’s number and final production. What is priced right now is the forecast.
Palm oil softened for more concrete reasons. The BMD October contract fell to 4,779 Malaysian ringgit a tonne from 4,850 a week earlier, and the March contract to 5,044 from 5,196, on lower Brent and slower shipments. One surveyor reported to Vesper that Malaysian palm oil shipments over 1 to 20 September fell nearly 13% against the same period in August, with Indonesian shipments over 1 to 15 September down 20.2%. Malaysian September stocks are expected above 3 million tonnes. Against that, StoneX estimates Indonesian output may have fallen 11% to 12% in August with a similar rate possible from October to December, on fires and very dry conditions in Central and West Kalimantan, and India may cut its basic import duty by 5%.
Energy set the tone for the rest. November Brent eased to around $100 a barrel from roughly $106 on renewed hopes of a diplomatic solution, though low sulphur gasoil is still at a record high, and that pulled CBOT soybean oil down to 68.32 US cents a pound from 69.65. Rapeseed oil FOB Dutch mill eased to €1,226 a tonne from €1,240 while MATIF rapeseed rose to €556 from €552, following strength in US soybeans ahead of the Trump and Xi meeting. Sunflower oil for October to December climbed to $1,400 a tonne from $1,390, with Black Sea logistics still unresolved. Vesper’s oils and fats analysis carries the quarterly outlook for each.
