Oilseeds - Oils

Olive oil: prices have risen 14-fold

December 14, 2023 at 12:50 PM , Der AUDITOR
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IZMIR. Declining production results and a high inflation rate are causing the price of Turkish olive oil to increase. There is no end in sight for the time being. Experts are also sceptical about the yield potential for the coming year.

Change of market focus

Despite the good yields, the Turkish market for olives and olive oil has seen regular price increases this year. A record crop was achieved just last year and the result in 2023 was also at least average, although it was an "off-year" in which yields are usually lower after a bumper production year. The reason for the continuing upward trend in prices is the growing demand from overseas. Spain and Italy are traditionally among the most important olive oil producing countries, but lower yields due to the drought have led to a shift in demand. In addition, Turkish traders have followed suit every time olive oil prices have risen in these two countries.

Fraudsters enter the scene

According to data from the International Olive Council, Spain and Italy together produced 2.271 million mt of olive oil in the 2021/2022 season, compared to just 1.504 million mt in the 2022/2023 season, and the result is expected to be significantly lower again this year, although exact figures are not yet available. This is the first time in recent years that global olive oil production has fallen below 3 million mt. In 2019/2020, the result was still at 3.269 million mt, in the 2022/2023 season it was only 2.729 million mt.

With the declining crops in Spain and Italy, Turkey increasingly became the focus of the international olive oil market. As a result, more and more olive trees were planted, now totalling around 200 million. While olive oil production in 2018/20196 was still at 193,500 mt, a record result of around 400,000 mt was achieved in the 2022/2023 season - production estimates vary between 380,000 and 420,000 mt, depending on the source. This year, however, the figure is expected to be just 179,000 mt.

The export volume climbed to 150,000 mt in the 2022/2023 season, compared to an average annual export volume of just 10,000 mt in the 1990s. Despite the growing volume, rising demand and inflation left their mark on the market. The Tariş Olive and Olive Oil Agricultural Sales Cooperatives Association sets the prices in Turkey every year; in 2019, these were still at TRY 20 per litre, whereas this year prices of TRY 295 per litre are being called for - almost 14 times more than was paid just a few years ago.

Since July of this year, olive oil has no longer been exported from Turkey in large containers, but this has not been enough to bring prices down. On the contrary, market players are expecting further price increases over the course of the season. According to the Turkish Minister of Agriculture and Forestry, more and more fraudsters are entering the market as prices rise. This makes additional checks necessary alongside the usual audits.

Possible improvement

Under normal conditions, the tide could turn again in the 2024/2025 season, but experts are not entirely convinced. " “Precipitation seems to be normal in Spain since September", says olive oil taster and oil expert Dr Mücahit Kıvrak. " If everything goes well and the Spanish achieve a production of 1.8 million tons next year, there will be a decrease in prices. Assuming that everything goes normally in our country, there will be much more supply than demand. This turns all scenarios upside down. But signs of dehydration are visible at the tips of new shoots in the fields. If the drought continues, production in Turkey may decrease significantly. Global climate change and drought will determine the next period”.

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