Global Courant 2023-05-04 10:27:11
“The problems contributing to prices approaching all-time highs are largely bad weather and a very dry growing season for much of the Mediterranean region, but especially in Spain, which is a major producer and exporter of olive oil,” according to Mintec’s oileds. and vegetable oils analyst, Kyle Holland.
Jeff Groenberg | Universal Image Group | Getty Images
Olive oil prices have reached record highs, thanks to a prolonged drought in top producer Spain – and the high prices are expected to continue for some time.
When renowned Spanish-American chef José Andrés tweeted that eggs should be fried one finger deep in olive oil, a user responded: “Olive oil can be a finger deep expensive. What’s an alternative for those of us on a budget?”
“Aldi olive oil spread used to cost 99p. It’s now £1.29 and many of the basic ranges are gone. Even Aldi is expensive now!” said another Twitter user, based in England.
According to data from the International Monetary Fundglobal olive oil prices have reached $5,989.8 per ton, mark a high point in 26 years.
And the high prices could remain “for a while,” Mintec’s oilseeds and vegetable oils analyst Kyle Holland said.
‘Extremely bad’ weather conditions
Bad weather in Spain, especially the prolonged dry period, is the main reason behind the rising prices.
“The issues contributing to prices reaching near all-time highs are largely bad weather and a very dry growing season for much of the Mediterranean region, but especially in Spain, which is a major producer and exporter of olive oil,” Holland said.
Due to “extremely bad” weather conditions, he said, the recent olive harvest from October to February produced yields 50% lower than the usual crop, tightening global supply and driving up prices.
“The extremely bad weather conditions caused…Spain to produce an olive oil crop of around 630,000 tons, down from the usual crop of 1.4 to 1.5 million tons,” he said.
The outbreak of the war in Ukraine, which led to a worldwide shortage of sunflower oil, increased the demand for olive oil even more.
David Valmorbida
resident of the Australian Olive Oil Association
Olive trees grow in warm and dry climates and the optimum temperature ranges from 60 to 80 degrees F.
Spain had a period of “very dry” weather in March, recording just 36% of its average monthly rainfall, according to the country’s data. Ministry of Ecological Transition. The country Experienced 36 consecutive months of below average rainfall.
And if the weather doesn’t improve, the next harvest could bring an even worse harvest.
“There could be a similar or even lower harvest than the previous season, according to market players, who also say that prices could remain at current levels for quite some time,” said Holland.
“It seems that the ongoing drought in Europe, especially in Spain’s largest olive oil-producing region, has caused a global shortage of olive oil,” David Valmorbida, president of the Australian Olive Oil Association, told CNBC.
Ask pressure
The pressure on demand puts even more pressure on already tested supply chains.
Demand for olive oil has been strong in recent years — prices have risen since 2020 as consumers more often ate and cooked at home during and after the Covid-19 pandemic, Valmorbida said.
In addition, the shortage of sunflower oil after the Russian invasion of Ukraine drove up prices.
“The outbreak of the war in Ukraine, which led to a worldwide shortage of sunflower oil, increased the demand for olive oil even more,” he added.
Workers shake olive trees during harvest on November 24, 2022 in Jaen, Spain. “Consumers have already begun to significantly reduce olive oil consumption, firstly by being less generous in their use, but secondly by switching to vegetable or seed oils or different oil blends,” said one analyst.
Carlos Gill | Getty Images News | Getty Images
Changing consumer habits may ease some of the pressure.
“Consumers have already begun to significantly reduce olive oil consumption, firstly by being less generous in their use, but secondly by switching to vegetable or seed oils or different oil blends,” Valmorbida said.
Nevertheless, he maintained that “at almost any cost” there will continue to be a basic demand for olive oil as a healthy and natural product.
“So without an increase in rainfall, we could continue to see historically high prices at or above 5 euros per kg into the 2023/24 harvest year.”
