CURRENT MARKET CONDITIONS & 2024 PRICING EXPLAINED
As many of you know, the challenges of the last two harvests have resulted in lower stocks and dramatic price increases. Thankfully, our team in Spain and Italy paid close attention to market conditions before the current situation skyrocketed, causing many market participants to face astronomical prices. Although we are not immune to these price swings, with proper planning and deep relationships in the Mediterranean, we made the necessary commitments last year to help our position in the 2024 market. Our goal is to always provide our customers with the same fresh, highest quality, premium product which you have counted on from us over the past 12 years.
PRIMARY ISSUES CONTRIBUTING TO HIGH EVOO PRICES:
TWO CONSECUTIVE YEARS OF EXTREME DROUGHT IN SPAIN
- Early Harvest EVOO pricing is sky high due to lower yields (drought), as well as the scarcity of quality EVOO this year pushing up the price.
- Water reservoir levels are now at 19.6% of the ten-year average; In 2023, water levels were down 61% versus the last ten years.
- Spain, representing 55% of global supply sets the olive oil price floor for all grades of EVOO.
- Green Premium EVOO is up 65% versus last January (2023), and 165% versus January 2022
- Lower yields in the Mediterranean pushed up price; Spain’s early crush yields were 2% lower than last year’s harvest due to drought.
- Green EVOO fruit prices were astronomical, with farmers demanding record-high prices for lower-yielding green fruit.
- Turkey, Syria, and Morocco are banning bulk exports; pushing up global prices to preserve their national market demand. The result is less available bulk oil for export markets.
- Tunisia has limited its bulk exports to EU member states and added a VAT tax/duty, further increasing bulk prices to Italy and Spain, its primary customers.
- Freight rate relief was positive earlier in 2023, but since the Red Sea conflict began, sea container freight rates have increased by 30% as of Jan. 2024.
- Global tensions and extreme water shortfalls in major canals create vessel log jams in major canals and waterways. This adds to slower shipping times and higher rates.
PURCHASING POWER & RESOURCES AT WORK
OPPORTUNISTIC BUYING
- Summer EVOO futures and long-term vendor mill relationships helped favorable pricing become a reality.
INVENTORY OUTLOOK
- We have ample stock of EVOO. In 2023 / 2024, we purchased in anticipation of a harvest shortfall to cover medium-term needs to protect our customers.
