The likely balance between supply and demand in the global olive oil market is looking extremely fine. And it should come as no surprise that Spain is holding all the reserve stocks that will make the difference between a tight year and a bearable year. There is an estimated total supply of 1.4 million tonnes in the EU and through probable third country exports. Demand can be expected to top 1.5 million tonnes with the shortfall made up from unsold carryover. Much of these reserve tonnages should have been sold in a series of auctions last autumn in Spain, but the intervention sales fell through when the parcels of corriente and lampante were graded. Most of the lots were withdrawn because the oil concerned no longer reached the stated grade. Everything still hangs on the volume of fruit which sets this summer in the groves. There is an advantage in buying cover until June and July. But the price of tankage for forward buying means there is no further advantage to be gained from trying to secure stocks further forward. By June the likely harvest forecasts will be circulating, at which point the price will either ease steadily to make room for a large new crop or will spiral upwards unpredictably, way beyond current levels of £1,700/tonne for good extra virgin. The Spanish producer co-operatives hold the whip hand in the present market, since they not only have the cheap credit lines to operate an unofficial intervention stock, but they also have the available bulk stocks. As happened last year, Spain is short of lampante and refining grades of oil for its domestic market, which trades mainly in pure olive oil on its vast home market. This has led to extra virgin stocks being refined down to pure ­ expensive both in terms of raw material and production costs. {{PROVISIONS }}