Spain faces the summer with a better olive oil campaign than the previous two, but with signals that keep the sector's attention on prices. The latest data linked to the Agency for Information and Food Control place cumulative production at around 1.28 million tons, below the initial forecasts, while the pace of market releases remains high.
That balance between a harvest superior to that of drought years, but lower than expected, is one of the reasons why the sector does not rule out new price tensions. The concern is not so much about an immediate supply problem as about how stocks will arrive at the link between campaigns, a key factor for market stability.
Another element that appears in the analyses is demand. The strong level of commercialization —with a good part of the production already placed, according to sectoral estimates— has curbed expectations of an abrupt fall in prices and has fueled caution for the coming months.
Added to this is the uncertainty about costs. The sector has warned that the evolution of energy and the international context may add pressure to margins and prices, a factor that has also appeared in messages of caution from agricultural organizations and operators.
A market waiting for summer
Summer is considered a sensitive period due to increased consumption and because it arrives before the first solid forecasts of the next harvest. That gap is what explains part of the sector's prudence.
Although after the historic increases of recent years there were expectations of normalization, the combination of lower-than-initially-expected production and smaller safety cushions keeps the debate open on whether prices could tighten again.
In this scenario, rather than talking about a new automatic escalation, the warnings point to a market sensitive to any alteration in supply, demand, or costs.
The oil deficit that worries the sector before summer
One of the concepts that is most repeated in the analyses is that of the structural deficit or tension of supply. It does not refer to an immediate lack of oil, but to the insufficiency to fully rebuild inventories after very hard-hit campaigns and to accompany strong demand.
Sector data points precisely to that concern for the so-called pipeline stocks, that is, the volume with which the next campaign will be reached. In a market so dependent on that balance, low levels can become a factor of pressure on prices.
The sector's concern is also supported by the fact that the campaign would have fallen around 7% below the initial estimate, according to data released by AICA and the Ministry of Agriculture. That adjustment is one of the elements that explain the caution.
Therefore, more than an alarm due to a lack of product, what appears in the sector is a call to monitor the evolution of stocks, demand, and costs in the months prior to the next harvest. That is, today, the main focus of concern about oil before summer.