Olive oil alert. World olive oil prices are soaring and could continue to do so, thanks to a combination of a drought in Spain and a fruit fly infestation in oil groves around Bari, in the premium Puglia region of southern Italy. The fungus has slashed Italian production by more than half, according to the International Olive Oil Council, while last year’s drought has slashed Spanish output by 53%. Oil from the Bari region produces the “Coratina” olive, a variety known for its strong taste and used for blending to give body and flavour to other extra-virgin olive oils from across Italy (and if truth be known, from other countries, such as Spain). But output of that olive has been slashed by the fruit fly infestation, so now global prices are soaring — up more than 70%, according to the council.
In its May newsletter, it said the price of Spanish oil hit reached 3.56 euros a kilogram in mid-May and 3.51 euros at the end of the month. The council said this was 78% more than a year earlier. It was only in 2012 that Spanish oil hit a 10-year low thanks to overproduction. But within months of that low being reached, prices soared by 60% as 600,000 tonnes of olives vanished because of the bitter drought in Spain. There is a growing danger that dry weather will hit the Spanish crop again in the 2015-16 crop year, meaning more upward pressure on prices. — Glenn Dyer
Good news for Greece? Greece’s central bank kept its begging bowl at home overnight, as it didn’t ask the European Central Bank for a top-up to help the country’s banks meet demands for cash from worried customers. This could indicate there has been a slowing in withdrawals thanks to the flow of positive news about the country’s talks with the EU and IMF. But that news flow turned overnight with talk of some Greek proposals being rejected and sniping at the country’s Prime Minister from hard-left members of his Syriza Party. So far the ECB has allocated 89 billion euros in emergency lending assistance to the Greek banks — that’s up 9 billion euros in the past 10 days. And ratings group Standard & Poor’s put it bluntly in a report on Greece overnight: “We consider that Greece’s exit — coupled with the loss of emergency European Central Bank (ECB) financing — would bankrupt Greece’s financial system. This could in turn send negative ripples across Southeastern Europe’s Greek-owned banks.” — Glenn Dyer
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And bad news for Greece. No sign of any agreement, with talks continuing in Brussels and another meeting of EU finance ministers due (the second in as many days). The Greeks won’t budge on pensions and other issues, so expect the bank run to ratchet up. Any deal has to be debated and approved by the Greek parliament in a three-day debate starting Friday night, our time. Suddenly the confidence in the markets of a deal being done is evaporating and nerves are on edge. Grexit, Graccident, call it was you may, is back in the limelight. And even if everything is hunky dory by next Tuesday when Greece has to make a big payment to the IMF, there are stumbles ahead in coming months — and none more debilitating than the banks.
Besides the 89 billion euros and other aid from the ECB, there are more and more media reports of ordinary Greeks walking away from their home and other loans, car financing deals, and credit card debt because they can’t afford to pay them back. The government has frozen its payments to businesses of all sizes, placing further pressure on their finances and on the banks. The worsening health of the Greek banks will drag the rest of the economy down, bailout or no bailout. — Glenn Dyer
Netflix. Streaming video giant Netflix is to split its shares on a seven-for-one basis to increase their affordability to investors, and to staff who are entitled to them in the company’s remuneration plans. The video streaming company’s shares rose more than 2% in early trading overnight, but ended up just over 2.58% lower as Wall Street fell because of rising doubts about a deal with Greece on its debts. They closed at around US$678.
The split will be in the form of a dividend of six additional shares for each outstanding share and will happen next month. Trading at the post-split price will start July 15. Netflix shares have risen by just on 100% so far this year (to a market value of US$40.3 billion), as the shares climbed close to US$700. The company’s shareholders approved the split at the annual meeting earlier this month. Apple split its shares a year ago this month and its shares have risen by around 30% — mostly due to the stunning sales success of the iPhone 6.
And Disney shares hit a new high of more than US$114 overnight after it lifted its dividend 15%. At this level the company is worth more than US$194 billion, almost three times the US$68 billion value of the the Murdoch clan’s 21st Century Fox. Disney shares are up more than 20%, not as good as Netflix, but still outperforming the US market. — Glenn Dyer