Olive oil has risen to record levels due to the ongoing drought in Spain, which is one of the largest producers and exporters of this product. According to the International Monetary Fund, global product prices have reached $5989,8 per tonne — the highest in 26 years — and could remain high for a while.
Due to extremely bad weather conditions, the olive harvest in Spain was 2022% less than usual from October 2023 to February 50, Mintec analyst Kyle Holland told CNBC.
"Spain has produced around 630.000 tonnes of olive oil, compared to the usual figure of 1,4-1,5 million tonnes," he explained.
In March, the country had "very dry" weather, according to the Spanish Environment Ministry: only 36% of the average monthly rainfall was recorded. Overall, there has been less rainfall than usual in Spain for 36 months in a row.
It seems that the drought in Europe as a whole, and in Spain in particular, has caused a global shortage of olive oil, demand for which has been quite high in recent years, says David Valmorbida, President of the Australian Olive Oil Association.
Prices for this product will increase starting in 2020, he said, because consumers ate and cooked at home more frequently during and after the COVID-19 pandemic. The shortage of sunflower oil has further increased the popularity of olive oil due to the war in Ukraine.
But now the opposite trend has happened – the demand for olive oil is starting to fall. Consumers use it more sparingly (in smaller amounts) and switch to other vegetable oils or different oil blends.
Nevertheless, the expert is certain that the basic demand for olive oil as a useful and natural product will remain "at almost any price". And if rainfall does not increase, record prices of five euros per kilogram or even higher will last at least until the 2023/24 harvest, he predicts.
Source: Ukragroconsult (Ukraine)