Olive oil prices have fallen more than expected in recent weeks after consumers in Spain and Italy “strongly” cut back on usage in response to tight supplies and high prices, Oil World reported.
Shoppers in Spain, Italy and Greece, the world’s biggest olive-oil consuming countries, have switched to cheaper vegetable oils as they face economic crisis, rising unemployment and reduced disposable income, the Hamburg-based oilseed- industry researcher wrote in an e-mailed report.
Spanish olive oil prices are forecast to average about $3,560 a metric ton in July, down from $3,706 in June and the lowest level this year, Oil World wrote. The switch to cheaper oils is “unprecedented” and contrasts with 2005-06, when prices as high as $5,000 a ton resulted in “only a fractional” drop of Spanish, Italian and Greek olive-oil consumption.
“This season has been different and domestic consumption of sunflower oil, corn oil and palm oil has increased,” Oil World wrote. “Because of the weak demand fundamentals, Spanish prices of virgin olive oil are unlikely to reach or exceed $4,000, which was originally expected to occur in the course of this season.”
Olive oil consumption in the European Union is forecast to slide by “an unprecedented” 270,000 tons, or 13 percent, to 1.74 million tons in the season through September 2013, Oil World wrote.
Olive oil for September delivery has slumped 19 percent this year to 2,240 euros a ton on the Mercado de Futuros del Aceite de Oliva in Jaen, Spain, the lowest price for that contract since August last year.
In addition to demand rationing, prices have been under pressure due to larger exports from Tunisia, Morocco and Turkey, according to the researcher. Prices are still about 17 percent above the 10-year average price for July, Oil World said.
World production of pressed olive oil is forecast at 2.46 million tons, down from 3.44 million tons in 2011-12, according to Oil World. Drought in Spain cut production to 614,000 tons from 1.6 million tons, it said.
Olive oil production may climb to 3.3 million tons in 2013-14, led by a recovery in Spain, Oil World predicted.
“It is possible that olive oil prices will recover during the remainder of the season, due to a supply squeeze before relief from new crop harvesting occurs,” the researcher said. “Small carry-over stocks will limit the recovery in world supplies of olive oil next season.”