Procurement Update February 2017

The yield of olive oil is 200,000 metric tonnes lower this year, which has put pressure on the price of bulk olive oil. Grain prices have also come under pressure due to the quality of the milled grain, rising globally which challenges the price of high protein pasta. Please see below an update on these two important product groups.

Pasta (Durum Wheat)

Adverse weather conditions in top wheat producing countries USA (cold and dry) and the Ukraine (snow) – combined with currency movements – have led to global grain prices going up this month.

Even though Canadian wheat production is expected to reach the second highest level on record, at 31.7m MT (against an average of 26m MT), supplies of high quality milling wheat are expected to be tight. This wheat is used to produce higher quality and higher protein pasta. We will continue to monitor the situation but this could mean upward price pressure in the short term. If you want us to try to help cover your requirements to beat potential rises please get in touch as soon as possible.

Extra Virgin Olive Oil

Italian buyers are pushing up prices on extra virgin olive oil rose due with an unprecedented early buying spree of Spanish oil. January saw extra virgin olive oil prices rise in Spain (+6%) and in Italy (+4%), due to poor harvests in the EU in the 2016/17 season.

Poor olive crops in Italy, Greece and North Africa offset the higher volume crop in Spain. As a result, global olive oil production is 200,000 metric tonnes lower than last year. Despite a large olive crop, last minute adverse weather conditions dramatically reduced the yield of oil from olives in Spain. Only Turkey has a decent crop (180,000mt production + 40,000mt of carryover from the previous season).

Our view would be to cover short while the prices are high in the hope that there may be some easing over the next few months.