Expectations are set for approximately a 25% increase in Olive Oil prices in the coming months.
Spain produces nearly half of the world’s olive oil. It along with other parts of Western Europe which produce olive oil, including Italy and Portugal, have been experiencing extreme temperatures, fires and a lack of rain in recent weeks.
Olives require rain simply to grow; but also in the final couple of months of growing, need the precipitation to help them to ‘swell’ or ‘fatten’. The more that they are able to do so, the higher the overall yield.
Producers have warned that the impact of this on the price of olive oil has not been observed due to 12 month contracts being in place.
However, in the next 3-4 months this will become apparent within the UK market.
In July the Mintec benchmark price for extra virgin olive oil rose to its highest level so far this year, up by 7.3% on the previous month and 14.2% on the previous year, according to the market research group.
The graph shows various interesting points:
- Andalucian Extra Virgin Olive Oil is now closer in price to the Italian EVOO from Bari than it has been in years. Spain is usually able to land prices far more competitively.
- Andalucian EVOO is almost the same price as Virgin and Refined olive oil from the same region. This is mostly down to the increased demand in the stead of Sunflower oil (following the Russia/Ukraine war).
- Usually by July/August, the prices of Olive oil will decline as the new season is approaching (in order to clear old stock). However, this year, the price has increased.
- Prices are currently at £3093.58/mt – Up 3.44% MoM – Up 7.81% QoQ – Up 10% YoY.
- This is expected to rise at least another 10-15% as the conditions at this stage of the year are dire.
Above the expectation of what might be coming across different regions. Andalucian crop expected at only 1.1m MT, while some industry sources estimate even lower at 957k MT.
There is some merit for customers intending to buy Extra Virgin Olive Oil and use this within the next 3 months, to purchase immediately.
However, given that the quality quickly degrades 12 months after production, any longer contracts should be closed in line with the new crop (December – January) in order to ensure quality/longevity.
For pure olive oil (refined), it’s recommended to look at securing some volume now in order to avoid potential future increases.