From Spain... Olive's Crop Updated

There is bad news, good news and more bad this year from the Andalusian growing regions of Spain.

All of us are aware of the continued bad news of the US Dollar (today essentially at 1.42 to the Euro) up over 5% from earlier this summer… That’s Bad news number 1.

Bad news number 2 is that the Queen Olives which we thought would be slightly higher in Euro terms but with decent quantities are showing to be 20% higher or more, and worse, and of REAL CONCERN…. SHORTER in supply than expected.

Why?

Demand….
Lack of more Queen Fruit Trees…
More Demand…
Sizes are Running too small…
And More Demand…

The increase demand seems to be related to the dissatisfaction of many who had gone to Argentina, Greece and Egypt to find alternative sources. What they found were serious quality problems.

The sizes are running smaller than 200 counts (called Azofairon) are essentially useless for stuffing or anything else!

The good news right now is that Hojis and Manzanillas are in good supply with prices (in euro terms) remaining stable.

More later…

Fed Cuts... Good News Bad News

The Fed Blinked... Or did they? The 1/2 point reduction in the Federal Funds Rate will (perhaps) lead to more liquidity in the money markets... And it will surely lead to a weaker US $ rate as international investor's relative return is eroded further.

Does this lead to inflation? Did the Fed act as part of the ripple effect of Northern Rock's Run in the UK? Does this action really do much?

There are as many questions as before and perhaps more uncertainty ahead. It is widely reported that this may not be the last reduction which will continue to dampen the US $ in the near term...

If there was a sense of "we are at the bottom" the healing (stabilization) could begin.... but without that and with the ECB looking still to raise rates, in the words of the famous philosopher and economist: "Katie... Bar the Door!"

Olive Previews Season Coming Fall 2007

As always with the harvests of crops that depend on weather and other factors beyond control, the Olive Season remains unclear at this juncture. Initial reports were positive for quantities with sizing looking to be smaller. The Californian Crop looks to be recovering from last years disasters...

The harvest in Spain has begun earlier then normal. But at the same time, there has been downpours of rain these last days(not usual for this time of year. It is not good for olives for canning or processing to have this occur at the time of the physical harvest. The impact remains to be seen in the coming days as to the harvest quality and quantities. (BTW, for Olive Oil these rains are a good thing as they continue to absorb water and would be left on the trees longer in any event and processed later.)

While we don't know yet the impact we do know:
1) Freight costs are rising again at an accelerated rate... $400 + has been asked by the Ocean Carriers...
2) Labor costs are higher as are incidentals to production (tins, glass, cartons, etc.)
3) In Dollar terms (see yesterday's entry) the prices are going up...

We will be in the groves in the coming days to evaluate completely the situation and to begin to cover our contractual needs in QUANTITIES... Book now with us your needs.

US $$ at NEW LOWS

The continued short term pressure on the US Dollar is apparent and widely reported. The basics are this:

1) There is a persistent speculation about a U.S. interest-rate cuts and conversely of another rise in rates by the ECB (European Central Banks).
2) The worries about turbulence in financial markets brought about by the sub prime lending dramas.
3) The bad economic news recently relative to the poor job markets.
4) The US Government's desire to have a low US $ (as witnessed by comments and lack of action).

For the Long Term the news is perhaps even worse. President Bush indicated in his address to the nation last night that the US commitment is open ended in Iraq. We are spending upwards of $330 million per day and that amount continues to go up. With no end in sight the disasters in the lives of citizens of both countries as well as the endless drag on the economy will have a long deleterious impact.

Mandarin Orange Season Update

The Following news came in:

The new Mandarin Oranges season is coming up soon with the Fall. New prices for sure will go up. The cost of production has gone up. Labor, tin plate, water, electricity, exchange rate, interests etc. have all been increasing. New crop does not look so good this year. All these compound the increase. Several packers are saying the price may go up by $2.00 a case.