EU News

An article in finanzas.com, published earlier in the month, states that the European Union is considering changing the labelling requirements for olive oil. New legislation, if approved, would give bottlers several options with regards to describing virgin and extra virgin olive oils. Oils proceeding from only one country would be able to labelled as such. Those being mixes of oil from different national origins would be described as 'mix of oils from the EU', 'mix of oils from without the union', or a combination of the two, as the case may be. Further, products containing pomace oil will have to specifically state that this is the case. Sardines, for example, packed in pomace will not be able to claim that they are soaking in olive oil.

In other related news, various Spanish agricultural organizations have come out strongly against EU legislation to allow blends of olive with other edible oils. According to Europa Press, ASAJA considers this to be an abandonment of the European policy of quality improvement within the industry following much effort in this regard by Spanish producers. One has to assume that the real issue is whether it will neagtively affect consumption, or not. We think that an argument can be made for both positions, but think that, in the end, mixtures of olive oil with sunflower at an accessible price, for example, will steal more business from the latter than from current consumption of pure olive oil. It may serve to defend producer prices by lowering the entry point for consumers or by making the daily use of this product, even if blended, economically feasible for more households. The new rules come into effect on July 1, 2009.

Lampante prices have broken below 2.20€ for November delivery on the MFAO, and cash is perched slightly above. At the same time, cash virgin has dropped below 2.30 while extra virgin continues firm at around 2.35/kilo. Large coming crop, large inventories, declining domestic consumption in a sluggish economy and, as we pointed out earlier might take place in response to banking problems in the U.S.A., the euro suddenly trading at $1.47. Barring some sort of international intervention, it is the dollar that takes the brunt of the various realignments that are currently taking place.