2016/17 Global Olive Oil Production Down But Prices Stabilize

Global olive oil supplies in 2016/17 are forecast to tighten as production prospects for major producers in the Mediterranean basin are revised lower. Total global production is forecast at 2.8 million tons, down 8 percent from the previous campaign. Olive oil prices have remained fairly stable over the last 12 months as a larger production in 2015/16 helped offset the previous year's crop losses. Ample carry-in stocks for 2016/17 have also helped to keep current olive oil prices stable. However, any further production shortfall could trigger a price rally similar to one that occurred in mid-2015.

The biggest change in production is projected for Tunisia where crop prospects have diminished. Heat damage, a lack of winter rains, and a severe drought during the summer months have negatively impacted yields. Accordingly, olive oil production is projected to decline almost 30 percent from the previous year to near 100,000 tons. This is expected to cut Tunisia's olive oil exports roughly in half compared to the previous year.

Olive oil production in the European Union is also facing significant losses due to diminished precipitation across the Mediterranean region. Dry weather from September through early October likely impacted yields in Spain, the world's largest olive oil producer. Prolonged dryness and insect pressure have also affected yields in Italy and Greece. Exports in 2016/17, however, are likely to remain near last season's level due to abundant carry-over stocks.

OVERVIEW

2016/17

Global oilseed production is forecast higher this month, primarily on larger soybean crops in the United States and Russia, as well as a larger peanut and rapeseed forecast in China. Oilseed exports are up on larger shipments from the United States, Ukraine and Russia, offset by a reduction in Argentina. Soybean imports are forecast slightly lower on reduced demand in Russia offset by an increase in Mexico. Global oil imports are up on higher soybean oil demand in India offset by a reduction in demand for palm and palm kernel oil. Global oilseed stocks are boosted, led by Argentina, United States, and China. The U.S. season-average farm price is up 15 cents to $9.15 per bushel.

2015/16

Global soybean and rapeseed production is raised on revised China production for 2015/16. Soybean imports are up on stronger demand from the European Union and China. Exports are down slightly with lower shipments from Argentina. Global stocks are raised this month led by China and Argentina.

SOYBEAN PRICES

U.S. export bids in October, FOB Gulf, averaged $388/ton, down $9 from last month.

For the week ending October 27, U.S. 2016/17 soybean export commitments (outstanding sales plus accumulated exports) to China totaled 19.4 million tons compared to 14.9 million a year ago. Total commitments to the world are 36.1 million tons, compared to 27.8 million for the same period last year.

2016/17 TRADE OUTLOOK CHANGES

  • United States
    • Soybean exports are up 680,000 tons to 55.8 million on larger exportable supplies.
    • Soybean meal exports are down 272,000 tons to 10.9 million on slowing demand.
  • Argentina soybean exports are down 400,000 tons to 9.3 million, and soybean meal exports are down 100,000 tons to 32.7 million on slowing demand.
  • Brazil soybean meal exports are down 300,000 tons to 15.5 million on slowing demand.
  • European Union
    • Soybean meal imports are down 200,000 tons to 30.0 million following tighter exportable supplies in South America resulting from lower crush.
    • Sunflowerseed meal imports are up 100,000 tons to 3.9 million on ample exportable supplies in the Black Sea region.
  • India
    • Palm oil imports are lowered 250,000 tons to 10.0 million, and palm kernel oil imports are lowered 100,000 tons to 130,000 on larger supplies of other vegetable oils.
    • Soybean oil imports are raised 400,000 tons to 4.0 million on growing domestic consumer demand.
  • Japan soybean meal imports are down 100,000 tons to 1.8 million on slowing protein demand.
  • Mexico soybean meal imports are lowered 100,000 tons to 2.5 million, while soybean imports are up 100,000 tons to 4.3 million on strong domestic crush margins.
  • Pakistan soybean meal imports are reduced 150,000 tons to 500,000 tons on lower forecast of domestic consumption.
  • Russia soybean imports are down 100,000 tons to 2.1 million following a larger crop.
  • Tunisia olive oil exports are slashed 100,000 tons to 70,000 in response to sharply lower production. 2015/16

TRADE CHANGES Select countries – based on trade data

  • United States soybean exports are lowered 103,000 tons to 10.9 million.
  • Algeria soybean oil imports are increased 115,000 tons to 715,000.
  • Argentina o Soybean exports are down 380,000 tons to 9.9 million.
    • Soybean meal exports are down 275,000 tons to 30.3 million.
    • Soybean oil exports are down 200,000 tons to 5.7 million.
  • Belarus sunflowerseed meal imports are reduced 110,000 tons to 520,000.
  • China
    • Soybean imports are raised 730,000 tons to 83.2 million.
    • Rapeseed meal imports are up 119,000 tons to 359,000 tons, while rapeseed imports are cut 239,000 tons to 4.0 million.
  • European Union
    • Soybean meal imports are down 600,000 tons to 19.3 million, while soybean imports are up 400,000 tons to 14.6 million.
    • Palm kernel meal imports are up 100,000 tons to 2.2 million.
    • Sunflowerseed meal imports are up 130,000 tons to 3.3 million, and sunflowerseed oil is up 100,000 tons to 1.4 million.
  • India
    • Soybean oil imports are raised 160,000 tons to 4.4 million while palm oil imports are down 515,000 tons to 8.7 million.
    • Peanut exports are up 100,000 tons to 780,000.
  • Pakistan soybean meal imports are lowered 100,000 tons to 450,000.
  • Philippines soybean meal imports are lowered 150,000 tons to 2.6 million.
  • Ukraine sunflowerseed meal exports are lowered 283,000 tons to 3.8 million while sunflowerseed oil exports are up 200,000 tons to 4.5 million.