Olive Oil Prices Hit Record Highs in Spain After 'Unprecedented' Market Events

Summary

Olive oil prices in Spain have reached record highs due to a com­bi­na­tion of low pro­duc­tion fore­casts and increased demand, with extra vir­gin olive oil sell­ing for €4,397 per 100 tons. The unprece­dented sit­u­a­tion is expected to con­tinue as the har­vest approaches, with prices likely to keep ris­ing if rain does not come soon to alle­vi­ate the ongo­ing drought.

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.”

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.

“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.”

• Agropopular