In the commodities bulletin, we put a focus on vegetable fats, specifically olive oil. First effects of demand destruction in the EU.
- The high premium of olive oil over other vegetable oils generated the first effects of demand rationing and substitution by the ample supply of sunflower oil in Europe, generating the first price declines.
- The new supply balances published by the European Commission show a drop in demand, mainly outside the Italian domestic market. On the other hand, high domestic stocks in Italy are now the main bearish factor that is expected to put some pressure on prices in the short term.
- In Spain and Greece, drought and water shortages are having a significant effect on production in the current marketing year, leading to higher prices.
The weather conditions in the Mediterranean area in the next few months will be decisive for next year's production, which is expected to be abundant in Spain and Italy, provided that water reserves are restored and the weather is favourable.
To read the full February 2023 Commodities Bulletin register here: