Following a protracted drought, the global olive oil market is set for recovery.
- Spain, a leading olive oil producer, saw its production plummet by 60% due to severe droughts.
- Favourable weather conditions now promise a more robust harvest in Spain.
- This improvement is expected to alleviate the upward pressure on olive oil prices.
- These changes might stabilise production costs and impact global supply chains.
The global olive oil market has been under significant strain following a two-year drought in Spain, one of the world’s largest producers. This adverse weather led to a dramatic 60% decline in olive oil production, significantly impacting international prices and supply.
Recent developments, characterised by more favourable weather conditions, have given hope to Spanish growers for a more bountiful harvest. Experts anticipate that once production stabilises, the increased supply could lead to a reduction in the prevailing high prices of olive oil.
Pedro Álvarez Ondina, an economist at CaixaBank Research, emphasised the critical role weather has played over the past two and a half years. The lack of rain posed a substantial challenge to the industry, compounded by rising production costs which are notably energy-intensive.
Earlier forecasts had predicted extra virgin olive oil prices could surpass £16 a litre, following an increase from £14 earlier in the year. These projections arose amid a broader context of declining global production, reaching its lowest in over a decade.
The situation with olive oil is not isolated. Other sectors, like the citrus industry, are facing similar challenges. This week, prominent juice producers reported that citrus greening disease is expected to elevate orange juice prices due to its impact on colour and acidity of oranges.
The recovery in Spain’s olive oil production due to improved weather signifies potential relief for global supplies and prices.
