Olive Oil Market Stable in E.U. Short-Term Outlook

The avail­abil­ity of food, ani­mal feed and fer­til­izer will not be sig­nif­i­cantly affected in the European Union, despite the ongo­ing Russian inva­sion of Ukraine, accord­ing to the bloc’s lat­est short-term agri­cul­tural out­look.

As a result, olive oil prices should stay at cur­rent lev­els while mar­ket­ing costs and demand are grow­ing. According to the report, the E.U. is largely self-suf­fi­cient in feed­ing itself, with a mas­sive agri-food trade sur­plus.

However, the report acknowl­edged the crit­i­cal role played by Ukraine in grain and seed oil mar­kets and warned how the war is fur­ther stress­ing global sup­ply chains, which were already cop­ing with con­sid­er­able chal­lenges before the out­break of the war.

Among the con­se­quences of the geopo­lit­i­cal ten­sions, com­mod­ity prices are ris­ing, includ­ing energy, fer­til­iz­ers, wheat and soy­beans. Experts expect those prices to grow fur­ther, poten­tially impact­ing the abil­ity of farm­ers to pur­chase fer­til­iz­ers, feed and pay their energy bills.

The report said the out­look is sta­ble in the bloc’s olive oil sec­tor. In the 2021/22 crop year, E.U. olive oil pro­duc­tion is expected to reach 2.3 mil­lion tons, a 10 per­cent increase com­pared with the pre­vi­ous sea­son.

Olive oil prices, which have steadily grown in the three bench­mark mar­kets in recent months, should stay at cur­rent lev­els. This will hap­pen pri­mar­ily because of increas­ing costs for pack­ag­ing and trans­port.

Olive oil prices will also be affected by higher demand for the prod­uct as a sub­sti­tute for other veg­etable oils, the prices of which are sky­rock­et­ing due to the war in Ukraine.

Given this sce­nario, E.U. experts believe that olive oil con­sump­tion within the European Union could rise 7 per­cent com­pared with the pre­vi­ous crop year. Partially as a result, a slight 3 per­cent decrease is esti­mated for exports.

In its recent report on the mar­ket sit­u­a­tion in the olive oil sec­tor, the European Union’s Common Organization of the Agricultural Markets said global olive oil pro­duc­tion should reach 3.378 mil­lion tons against the 3.010 mil­lion tons of the pre­vi­ous sea­son.

Looking at the five-years pro­duc­tion aver­age, E.U. olive oil pro­duc­tion grew by 11 per­cent in the 2021/22 crop year.

Spain is expected to con­tribute 66 per­cent of the yields with 1.49 mil­lion tons in the cur­rent sea­son, fol­lowed by Italy with 15 per­cent (328,000 tons) and Greece with 10 per­cent (215,000 tons).

While most of the world’s pro­duc­tion comes from E.U. mem­ber states, the com­mit­tee also high­lighted the global recov­ery in olive oil pro­duc­tion in non‑E.U. coun­tries, which is fore­casted to reach 1.125 mil­lion tons, up from 959,000 tons in the pre­vi­ous crop year.

The report noted how those num­bers should bring the cur­rent sea­son’s results 1 per­cent above the five-year aver­age for non‑E.U. pro­duc­ing coun­tries.

• E.U. Short-Term Agricultural Outlook Report
• Common Organization of the Agricultural Markets