Prices for all grades of olive oil shot up after the Spanish and Andalusian governments released official harvest estimates well below initial expectations.
Despite built-in expectations of a disastrous harvest, few in Spain were prepared for olive oil prices to reach record highs last week.
“We are living in a moment that is completely unprecedented,” Juan Vilar, a strategic consultant, told Olive Oil Times. “Olive oil has never had such a high price.”
If it does not rain, it would be impossible to predict how far the prices will rise.- Juan Vilar, strategic consultant
According to Poolred, an olive oil price database run by the Andalusian government, extra virgin olive oil is currently selling for €4,397 per 100 tons, virgin olive oil is priced at €4,261 per 100 tons and lampante olive oil is selling for €4,005 per 100 tons.
Álvaro Olavarría, manager of Oleoestepa, a cooperative, told Agropopular that olive oil prices at origin rose between 25 and 47 percent compared to this time last year.
See Also:Olive Oil Prices Rising Worldwide“Last week, both the Andalusian government and the Spanish government made an official harvest forecast,” Vilar said. “Their official harvest forecasts are somewhat lower than what was thought would happen.”
Spain’s agriculture ministry said it anticipated production to be a bit less than 800,000 tons. Andalusia’s agriculture ministry said it expected a bit more than 700,000 tons.
For his part, Vilar thinks Spain’s final production figures will fall somewhere between 900,000 and 1 million tons.
“The official reading made by the two ministries has produced a price increase,” Vilar said, describing this as an unprecedented moment for the Spanish olive oil market.
Normally, prices are tied to the Spanish harvest since the country is the world’s largest olive oil producer by a significant margin, accounting for roughly half of the global yield in any given year.
“When there is low production in Spain, prices are high and when there is a lot of production in Spain, prices fall,” Vilar said. “This is something that has been repeated for the last 40 years.”
However, this year’s harvest, which could be the worst of the past decade, has coincided with significant declines in other large producers, including Italy, Morocco, Portugal and Tunisia.
At first, when unofficial production estimates were 1 million tons, Spanish millers and bottlers speculated that this year’s yield, combined with leftover stocks from last year, would just about cover demand at home and from abroad.
“Demand remains more or less stable,” Vilar said. “So now, there is not enough supply to cover all the demand during the coming year.”
These unprecedented price increases come months after olive oil prices experienced a separate but equally uncharacteristic 15 percent increase caused by the Russian invasion of Ukraine.
The two countries are among the largest sunflower oil exporters. The combination of Western sanctions on Russia and the severe damage done to Ukraine’s sunflower harvest caused some Spanish restaurants and consumers to swap sunflower oil for olive oil.
Still, Olavarría urged consumers not to stop buying olive oil. He said the average consumer would only pay €5 more per person in 2022 compared to 2021.
However, Vilar said if no rain comes before the harvest gets underway in the coming weeks, prices at origin will keep rising. Last month, the European Commission warned the drought is likely to persist on the Iberian Peninsula until November.
“There is no way for prices to stop rising,” he concluded. “If it does not rain, it would be impossible to predict how far the prices will rise.”
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