Olive oil prices continue to rise due to consistently stable export demand
The olive oil prices have been consistently rising, marking a continuation of market dynamics from late 2023 into early 2024, which has led to unprecedented high valuations for both refined and extra virgin olive oils.
This reflects a crisis to the survival of olive trees apart from the impacted consumerism and soaring olive oil prices. These trees play a crucial role in mitigating global climate change impacts. The Mediterranean region, where most of the world's olive oil is produced, is currently facing an extended drought, particularly in Spain, keeping prices elevated due to sustained export demand despite a slight dip in local consumption.
The olive oil production is anticipated to decline due to adverse weather conditions experienced throughout the growth cycle. Recently, Spain, Portugal, and Greece encountered an exceptionally dry and hot spring, while Italy received beneficial rainfall. However, sporadic rain episodes before and during the summer did little to alleviate the conditions in Spain and Portugal, as they were soon followed by new heatwaves.
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This weather pattern is likely to encourage the development of olive flies and pests, further compromising Spain and Portugal's production potential, which is expected to recover only about 20% compared to the previous year. Greece faces a natural downturn in its alternate bearing cycle, expecting a production decrease of around 20%. In contrast, Italy's production is poised for growth, benefiting from being in an on-year of the cycle, unlike Greece. This situation offers a glimpse into the future crop potential, especially in Spain, and may potentially ease market tensions by spring 2024.
According to the article by Procurement Resource, olive oil prices have surged due to market trends and a Mediterranean drought, especially in Spain, affecting olive tree survival and disrupting climate change impacts. Adverse weather has hit Spain, Portugal, and Greece with drought and heat, while Italy saw beneficial rain. Pest risks and heatwaves hinder Spain and Portugal's recovery, projected at only 20% of previous output. Greece anticipates a 20% production drop, whereas Italy expects growth, potentially easing tensions by spring 2024.
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