Despite hopes that prices would come down in the new year, olive oil is not expected to get any cheaper until well into the spring now, buyers have been warned.
After years of bargain-basement prices, wholesale prices of the oil started soaring last summer following a disastrous harvest in Spain, where production is expected to be down 49.2% year-on-year [International Olive Council].
At present, extra-virgin olive oil costs about €3,300/tonne - 40% more than in June 2012. Refined olive oil, which is normally 10% cheaper than extra-virgin oil, has also soared, and is now trading at roughly the same price as its more premium extra-virgin cousin.
Commodity prices 9 February 2013: milling wheat down 2.7%
Thanks to a rather hesitant start to trading activity in the new year, milling wheat is one of our key monthly fallers - down 2.7% over the past month - but wheat prices remain significantly higher than a year ago. At £204.3/tonne, French milling wheat is currently up by 24.4% on last year.
It’s a different story for durum wheat, which remains on a firm downward trend, thanks to an expected 2.4% increase in EU production, to 8.5 million tonnes, this year.
As for this month’s key risers, the lauric oils - coconut and palm kernel - as well as palm oil continue their recent upward curve, having all risen by 6% or more over the past month. However, all three oils remain cheaper on a year-on-year basis
Many retailers put off buying decisions in December in the hope of getting a better deal in the new year, but suppliers are warning prices are now unlikely to fall before the end of April.
“There have been some small blips recently - we’re talking about maybe a percentage point - but I don’t see prices coming down more until blossoming takes place when we’ll have an indication of next season’s crop,” said Walter Zanré, MD of Filippo Berio UK.
Zanré added retailers were partly contributing to keeping prices high because they were buying on much shorter contracts than usual. “Normally, retailers buy on one-year contracts, but some are now buying just four or five weeks’ worth at a time,” said Zanré. “Of course, that perpetuates demand and keeps prices high.” The recent weakening of sterling against the euro had also increased prices to UK buyers, he added.
Although wholesale prices have spiked up in recent months, retail prices for olive oil have remained relatively stable in the UK to date. However, on the Continent, wholesale increases have already started to filter through to consumers, with retail prices up by about 10% to 15% year-on-year.