`Olive Oil Prices Hit Two-Year High in Spain - Olive Oil Times

Olive Oil Prices Hit Two-Year High in Spain

Apr. 16, 2021
Daniel Dawson

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Extra vir­gin olive oil prices in Spain have reached their high­est point since November 2018, accord­ing to data from the International Olive Council (IOC).

The price of extra vir­gin olive oil in Jaén, which is con­sid­ered the bench­mark for Spanish olive oil pro­duc­tion, reached €272 for 100 kilo­grams, 27.8 per­cent higher than it was one year ago.

Everything depends on the elas­tic­ity of demand. The moment is not the most appro­pri­ate for con­sumers to pay these prices due to a weak­en­ing in net income.- Juan Vilar, CEO, Juan Vilar Strategic Consultants

The prices of all grades of olive oil from Jaén have also enjoyed a steady increase over the past year, with olive pomace oil, non-vir­gin refined olive oil, vir­gin olive oil and lam­pante olive oil prices hit­ting two year highs.

There have been sev­eral unprece­dented cir­cum­stances, which have meant that a year in which Spain is going to have an aver­age pro­duc­tion, prices have risen to more than €3.00 [per liter] in cer­tain cat­e­gories,” Juan Vilar Hernández, an inter­na­tional olive oil ana­lyst, uni­ver­sity pro­fes­sor and strate­gic con­sul­tant, told Olive Oil Times. This had never hap­pened.”

See Also: Exports and Prices Are Looking Up in Greece

A com­bi­na­tion of the tem­po­rary sus­pen­sion of tar­iffs nego­ti­ated by the United States and European Union last month, chal­leng­ing cli­matic con­di­tions, COVID-19 pan­demic and global olive oil con­sump­tion out­pac­ing pro­duc­tion in the cur­rent crop year have all con­tributed to the increas­ing prices.

It has been a strange inter­na­tional har­vest, where none of the fore­casts have been ful­filled for cli­matic rea­sons and indus­trial per­for­mance,” Vilar said. The stars have aligned to ben­e­fit the sec­tor at source, with­out a doubt.”

Normally, when Spanish pro­duc­ers enter an off-year in the olive trees’ nat­ural alter­nate bear­ing cycle, the rest of the Mediterranean enters an on-year. This leads to a rel­a­tively con­sis­tent level of global pro­duc­tion, which, in turn, bal­ances out prices.

However, low yields in Spain this year have been com­pounded by poor har­vests in Italy, Greece, Tunisia and Turkey, all of which have led to lower pro­duc­tion lev­els than ini­tially fore­casted.

This has come together with a pos­i­tive evo­lu­tion of con­sump­tion, which has posi­tioned itself above demand, pulling every one of the olive oil cat­e­gories on the rise, espe­cially extra vir­gin, as it is the least abun­dant in per­cent­age terms,” Vilar said.

Increasing prices in Spain come as a mas­sive relief to pro­duc­ers of all sizes, accord­ing to Vilar. Since olive oil prices plum­meted in March 2018, pro­duc­ers have had to sell their oils for less than pro­duc­tion costs.

Various relief mea­sures from the Spanish gov­ern­ment and European Union failed to appease olive farm­ers, who have fre­quently protested the per­sis­tently low prices since 2018.

These price increases at ori­gin ben­e­fit all olive grow­ers,” Vilar said. That is to say; it is good for every­one. However, it ben­e­fits mod­ern olive groves more, which will see their profit mar­gins grow to a greater extent in absolute value than tra­di­tional groves.”

Vilar added that increased prices at ori­gin do not ben­e­fit the entire sec­tor, with bot­tlers and pack­agers likely to lose money as they pay more for even the cheap­est grades of olive oil. Vilar said this could lead to an increase in prices for con­sumers and a poten­tial decrease in demand.

See Also: Apulian Producers Call for More Government Support for Olive Oil Sector

Outside of Spain, extra vir­gin olive oil prices in both Bari and Chania, the bench­mark mar­kets of Italy and Greece, respec­tively, have also ral­lied. Jaén, Bari and Chania rep­re­sent roughly 60 per­cent of global olive oil pro­duc­tion.

Prices in Bari cur­rently sit at €469 per 100 kilo­grams, slightly down from the highs of ear­lier in the crop year, but still 51 per­cent higher than the same point last year.

Likewise, prices in Chania have risen to €257 per 100 kilo­grams, their high­est lev­els since October 2019 and 24 per­cent higher than prices at the same point last year.

In a note sent by the Spanish Association of Olive Oil Exporting, Industry and Commerce (Asoliva) to its mem­bers and Olive Oil Times, Executive Director Rafael Pico Lapuente wrote that ris­ing global demand paired with poor har­vests through­out the Mediterranean would con­tinue to impact inter­na­tional prices.

It can be eas­ily deduced that a decrease in the avail­abil­ity of olive oil in Spain, the world’s lead­ing pro­ducer coun­try, and a lower avail­abil­ity in the rest of the pro­duc­ing coun­tries, may affect the evo­lu­tion of inter­na­tional mar­ket prices, as in fact, seems to be occur­ring,” he wrote.

While fore­cast­ing where prices are headed is never an easy task, Vilar doubts that they will reach the record highs of 2016/17, when extra vir­gin olive oil was sell­ing for €4.15 per liter. He said that prices this high would be detri­men­tal to the sec­tor and drive down demand in most of the world.

However, he did not rule out fur­ther increases as the crop year evolves and har­vests get under­way in the Southern Hemisphere.

Prices could con­tinue to increase, but with cer­tain lim­i­ta­tions,” he said. Everything depends on the elas­tic­ity of demand. The moment is not the most appro­pri­ate for con­sumers to pay these prices due to a weak­en­ing in net income.”

Other fac­tor that could stop the evo­lu­tion would be an improve­ment in the weather, which would envi­sion a higher yield next year,” he added.





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