Bulk prices for extra virgin olive oil have shot up 57 cents in Spain amid gloomy harvest forecasts for the next season, which starts in a month.
In May olive oil prices were at their lowest since 2009, according to the International Olive Council, with EVOO down to €1.77 ($2.22) a kilo.
But Spain’s olive oil price information system POOLred shows that since July there’s been a strong recovery.
For the week to August 29, the average bulk price for EVOO was nearly €2.34/kg, virgin was €2.30/kg, and lampante, though inferior to virgin, came in above it at nearly €2.33/kg.
The monthly averages to August 29 for EVOO, virgin and lampante were €2.14, €2.06, and €2.08, up from €1.82, €1.73 and €1.67 respectively for July. About 33,054 tons of bulk olive oil were traded in August and 58,444 in July.
Producer organizations are quick to stress, nevertheless, that prices are still below the break-even point, which some peg at €2.40/kg
The fact that private storage aid from the European Commission is temporarily keeping 203,000 t of Spain’s stocks of virgin olive oil off the market and total output next season is predicted to be half this one’s – largely due to drought – are said to have spawned the recovery.
But Spanish magazine Olimerca says speculation is helping drive prices even higher. Some producers are hanging on to their stocks in the hopes they will get even better returns later. Those at the packaging end warn them, however, they may be disappointed because in past seasons production has generally always exceeded expectations.
Crackdown on using olive oil as loss leader
Much to the chagrin of producers, olive oil is often used as a supermarket loss leader in Spain but it’s now been reported that a consumer authority in the region of Murcia has put its foot down, imposing fines totaling €6000 ($7,530) on an unnamed supermarket for violations including selling EVOO at a loss.
Olive oil in school lunches
And in other good news for producers, in a contract for the supply of school meals for the next two years the Andalusian regional government selection criteria is said to have included “the exclusive use of olive oil” and “menus based on the Mediterranean diet with plenty of fruits and vegetables.”