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The EC believes that olive oil prices should remain above the historical average because of low stock levels

The EC believes that olive oil prices should remain above the historical average because of low stock levels

2017/06/10 - The European Commission (EC) expects that EU production of olive oil in the 2017/18 season will bw "probably" better than in the previous season, although it doesntt expect it to reach a level above the average of the last five years. This will also have an effect on prices that could fall with the new crop, but should remain above the historical average, taking into account the low level of final stocks in September 2017 (estimated at around 40% below last campaign's figures).

This is highlighted by the Community Executive in its report on the short-term prospects of the Commission which includes an analysis of market developments and estimates for olive oil.

The EU production of olive oil in the 2016/2017 campaign3, which just ended, is 25 % lower compared to 2015/2016 and 15% below the last 5-year average. All EU producing Member States showed a drop as a result of the bad weather conditions, Italy being affected the most (-62 %), followed by France (-48 %) and Greece (-39 %). Italy accounts for almost half of the drop in EU production (- 582 000 t).

EU exports are stable but EU consumption decreases
Despite the lower production, the EU maintained its export volume on the world market. In the first 10 months (October — July) of the campaign, EU exports were 1 % higher compared to the same period of the previous campaign and 4 % higher compared to the last 5-year average. Exports performed particularly well at the beginning of the campaign and decreased from December onwards (except March), reflecting the lower production and higher prices.

The average EU price of virgin olive oil reported in August fell to EUR 367/100kg from its peak of EUR 382/100kg in May. Prices stopped rising in June in anticipation of the new harvest but also as a result of the negative effect of high prices on consumption, particularly in producing countries. Nevertheless, producer prices for virgin olive oil are still well above the last 5-year average (+40 %). EU consumption is estimated to be 12 % below the previous campaign and per capita consumption was particularly down in Greece and Italy.

World demand stays strong

Global demand continues to rise, driven mainly by the US, China, Brazil and Japan, which together accounted for 63 % of EU exports in the first 10 months of the 2016-2017 campaign. The US alone accounted for almost 40 % of all EU shipments. China has almost quadrupled its imports of European olive oil since 2003 to become the fourth destination after the US, Japan and Brazil. EU shipments to Brazil recovered slightly in 2016-2017 after 3 years of decline due to the economic crisis.

Expectations for the 2017/2018 campaign

Thanks to recent moderate precipitations and the good weather at the time of flowering, the EU production of the 2017/2018 campaign will likely be better than in 2016-2017. However, it is not expected to reach a level above the last 5-year average. This will also have an effect on prices that could go down with the new harvest but should remain well above the historical average, taking into account the low level of ending stocks in September 2017 (estimated around 40 % lower than in the last campaign). Stocks will be low at the beginning of the new campaign and the lower olive oil availability and the high prices might result in slightly lower EU exports and a stable domestic consumption.

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