Italian olive oil stocks are running low. According to a recent report from the Italian Ministry of Agriculture, total oil stocks (including extra virgin, virgin, olive, lampante, and refined) amounted to 137,446 tons as of July 31, with 118,931 tons in bulk and 18,516 tons packaged.

Olimerca reports that, based on Italy’s consumption rates, to maintain a minimum stock level by October 31 (before the olive harvest begins), Italian producers will need to import over 100,000 tons of extra virgin olive oil and around 15,000 tons of lampante/refined oil. At least 70% of these imports must be sourced from Spain, putting pressure on the Spanish market in the coming weeks due to Italian demand.

This demand has already impacted Spanish prices, as noted by the Vesper Price Index:

  • The Vesper Spain Price Index for Crude Olive Oil, Pomace (as of August 21, 2024) remained steady at €2,300 | $2,569 per metric ton (EXW Spain).
  • The Vesper Spain Price Index for Lampante Virgin Olive Oil (as of August 21, 2024) increased to €6,550 | $7,315 per metric ton (EXW Spain) from €6,500 | $7,145 per metric ton on August 14, 2024.
  • The Vesper Spain Price Index for Refined Olive Oil (as of August 23, 2024) rose to €6,200 | $6,924 per metric ton (EXW Andalucia) from €6,000 | $6,475 per metric ton on August 2, 2024.

Market participants note that sellers are becoming more confident as stocks and supply diminish toward the end of the season. However, some believe this could be a temporary trend, as forward prices for November prices remain 20% lower than current levels.

Outlook

Vesper’s machine learning model forecasts a downward price trend for Refined Olive Oil (EXW Spain) until November, after which it could move sideways, see figure below. However, not all market participants agree with this prediction, saying that prices can stay elevated till the harvesting as stocks deplete.

Vesper’s price forecast for Spanish Refined Olive Oil in EUR/mt

Looking further ahead, some market participants believe the price reduction during the October harvest could be sharper than Vesper’s projections. Ministry officials are optimistic that Spanish olive oil production will return to normal levels, around 1,530,000 metric tons, compared to the 2023/24 crop, which was assessed at 700,000-750,000 metric tons. The Scientific Society of Olive Encyclopedists estimates that the next season could see global production rise to 3.2 million metric tons, up from 2.85 million metric tons in 2023/24, aligning with historical averages. This anticipated increase in supply is expected to put downward pressure on prices.