Olive Oil prices in 2023 – why the prices of olive oil raised
The Olive Oil prices in 2023 – why the prices of olive oil are very increased this year?
As of September 2023 the wholesaler price of Olive Oil is at a current level of 9.364,94 USD/mt, up from 9.034,55 USD/mt last month and up from 4.316,42 USD/mt one year ago. This is a change of 3,66% from last month (Aug 2023) and 117,0% from one year ago.
(prices are USD per Metric Ton, for Extra Virgin Olive Oil of less than 1% free fatty acid. Ex-tanker price UK)
Olive Oil prices have increased to an all-time high – Spanish extra virgin olive oil prices (Euro/Kg)
Source: Mintec (© Financial Times)
Generalized Increase in Olive Oil Prices: Causes, Risks and Possible Implications
The triggering factors for the big increase of olive oil prices in 2023 are:
- Climate change
- ever-increasing drought which has put the pinkies (flowering) to the test and the harvest has been compromised
- impossibility of irrigation
- minimal vegetative growth
which caused a very low production campaign for olive oil in 2023, particularly on the top olive oil production countries: SPAIN (-56%), ITALY (-27%), Portugal (-39%), while GREECE (the third highest olive oil producing country worldwide) saw a 42% increase in olive oil production in 2023 compared to 2022.
Other factors contributing to the unprecedented liquidity crisis are:
- supply costs more than doubled
- poor liquidity due to low sales
- interest rates on loans rising
Record olive oil prices keep climbing after Spanish drought.
Wholesale Olive Oil prices raised in record levels in face of soaring temperatures and lack of rain.
12 July 2023 (SOURCE: Financial Times, ft.com)
Prices for olive oil are surging further in to record-breaking territory after an extended period of unusually dry weather in southern Europe damaged crops.
European prices first moved above €4 per kilogramme in September but have now shot up to more than €7 per kg owing to soaring temperatures and a lack of rainfall in Spain, the world’s largest producer, as well as in Italy and Portugal.
“We’ve had a very poor crop, prices have never been this high, and concerns extend beyond the season we’ve just had,” said Kyle Holland, oilseeds and vegetable oils analyst at Mintec, the commodity data firm.
Spanish officials say the devastating effects of heatwaves and water shortages demonstrate the urgency of tackling climate change, but an election next week could install a new government that is less convinced.
The matter has become a hot topic in Spain, where olive oil is a staple product with an outsized influence on economic sentiment. News organisations have extensive coverage of where consumers can buy the most affordable bottles as prices rise. Some big investors have warned that climate change could prove to be a lasting support for global inflation, in part because of the impact on food prices and in part because of the huge sums governments need to spend to mitigate or reduce it.
The EU says it produces two-thirds of the world’s olive oil, with the US, Brazil and Japan among the main destinations. In the UK, the average price of a bottle of olive oil climbed 47% in the year to May, according to the Office for National Statistics.
Producers in southern Europe were sitting on total stocks of roughly 205.000 metric tonnes of olive oil at the end of June, down from 265.000 tonnes by the end of May, according to Mintec.
“I can’t reiterate how low that is, it’s completely unheard of in the market,” Kyle Holland added. “This is not just your really high qualities, it’s all olive oil.” Spain produced just 620.000 tonnes of olive oil during the 2022-2023 harvest, down from 1,5mn tonnes the year before.
Supplies are drawing down by about 80.000 tonnes every four weeks, meaning stockpiles are likely to run very low in the three months before the start of this year’s harvest, which usually runs through to February.
Declining production figures mean the outlook for the next quarter is grim, said Asaja, a farm lobby group. “There’s tension in the market so if prices are going anywhere they’re going up”, said Luis Carlos Valero of Asaja in Jaén, the capital of olive oil production in Andalusia.
One-third of the country is suffering a “prolonged drought”, according to the environment ministry. Water levels in Spain’s reservoirs dropped last week by the biggest margin in 10 months.
Parts of Spain received rains in June, reducing the water stress on olive trees, but olive oil farming groups said they came too late to nourish an increase in the fruit they bore. Olive oil analyst and professor at the University of Jaén, Juan Vilar, said prices of olive oil were also climbing because farmers’ costs had risen owing to higher interest rates and inflation in fertiliser prices driven by the energy crisis.
“Olive oil prices in oil mills are reaching maximum levels in the 2022/2023 crop year. Prices of extra virgin olive oil increased by more than 40% in the fourth week of March 2023, compared with the same period previous crop year”
- olive oil production in Italy decreased by 27% this year (Italy is the second biggest producer of olive oil)
- olive oil production in Greece increased by 42% (Greece is the third biggest producer of olive oil)
- but the most worrying figure is the 56% collapse of olive oil production in Spain (Spain is the no1 producer of olive oil worldwide)
OLIVE OIL PRICES IN SPAIN
Olive oil prices explode in Spain (EURONEWS)
The increase in price and raw materials combined with climate change has made olive oil a luxury good
We are in Madrid, in one of the many Spanish olive groves where olive oil is extracted, one of the most consumed products in the world and an essential ingredient of the Mediterranean diet. But its price has reached historic highs in recent months…
Says Jaime Velazquez, euronews: “Spain is the world’s leading producer of olive oil, yet it is the country where its price has increased the most in the entire European Union.”
Drought and extreme heat waves have halved Spain’s olive oil production. The price at origin has increased by 112% compared to last year, but farmers like Jesús Anchuelo declare themselves at a loss: “We have had higher, historic, production costs than ever before. This oil that is sold now, the whose price increases every two weeks, was paid at a price that we could barely cover the production costs.”
The liter of oil in Spanish shops increased by 52.5% in a year, well above the European average of 38.3% and producing countries such as Italy, Greece and Portugal.
The rise in the cost of olive oil is also pushing up the price of other products, including canned goods. Now in Spain, the most expensive ingredient in a can of sardines is the olive oil it contains.
Spain exports 70% of its production abroad; Against a backdrop of supply shortages, Spanish consumers are competing for olive oil in an increasingly competitive global market.
Jaime Lillo, deputy director, International Olive Council: In Spain, we are used to lower olive oil prices than in the rest of the world. And so it happened that in Spain, where prices were lower, they became in line with Italian prices, with prices paid in the United States, in France, in Greece.
This year’s production is expected to be very similar to last year’s. A possible decrease in the price of olive oil will only come with an increase in production. If climate change will finally give Mediterranean countries a reprieve.
Why are the Olive Oil prices in 2023 raising?
Olive Oil Prices Reach Record Levels
Olive oil prices hit 26-year high amid supply setbacks – olive oil farmers say extreme temperatures caused a huge drop in the output of olive oil in Spain (the world’s largest olive oil producer) and most of the Mediterranean region, triggering a big jump in olive oil prices worldwide.
OLIVE OIL PRICES IN ITALY
IL MESSAGGERO – 20 Agosto 2023
Climate effect on crops, skyrocketing oil prices. Extra virgin olive oil reaches peaks of almost 14 euros per Liter. In Spain, production collapses by 55% and Turkey is blocking exports of Olive Oil for now.
Climate effect on crops, skyrocketing oil prices. Extra virgin olive oil reaches peaks of almost 14 euros per litre
Olive oil has never been as expensive as it has been in recent weeks and, unfortunately, it is destined to rise further due to the concomitance of three pieces of news in recent days: 1) the Spanish government officially predicts a disastrous olive oil campaign (-55% compared to 2022, 660,000 tonnes against 1.48 million); 2) Turkey, the second largest producing country in the world, bans the export of its oil until the end of November, thus hoping to limit the price increase on the domestic market (+102%, compared to the export record of +240% towards Mediterranean countries); 3) in Italy – the ICQRF of the Ministry of Agriculture communicated – the stock of extra virgin olive oil has reduced to 52 thousand tons. Considering the July trend of 15 thousand tons, the end of stocks can be expected in September. A situation never seen before.
«At risk – writes the specialized portal “Teatro naturale” – are above all the September/October promotional campaigns in large-scale retail trade in which, next to the new oil, bottles from the previous year’s stocks were placed at rock-bottom prices.
The repetition of such a phenomenon will only be possible due to the desperation of some operator in need of immediate liquidity and therefore willing to sell off the product”. In any case, supermarket special offers are now already 40% more expensive than two years ago.
Other clouds from the ex-farm price surveys carried out by Ismea last week with peaks for extra virgin olive oil of 13.63 euros per liter in Florence and 13.50 in Verona; 12.50 in Imperia; 11 in Chieti and Pescara; between 9.18 and 9.40 in Perugia, Ragusa and Siena; 8.10 in Viterbo. Prices abroad are also higher than usual with peaks – reported by “Olio officina” – in Greece of 8.45 for the Creta variety and 8.25 for the Peloponnese; in Spain 8.50 for the usually cheap Andalucia; 7.80 for oil from Sfax in Tunisia and 7.50 in Meknès in Morocco. These are – let us specify – values in the company which then rise further due to inflation and logistics costs. «Prices – explains Mario Rocchi, a producer in Lucca who exports to three continents – are affected by the decrease in production due to the anomalous heat, which in May compromised flowering and fruit set, and the water deficit, which from July onwards damaged the growth of the olives”.
According to Rocchi, prices will not drop before the autumn of 2024, also because the 2023 harvest campaign does not seem to start under the best auspices, again due to the climate. «The hope is that it may rain in a few weeks’ time», says Gianluca Boeri, president of Coldiretti Liguria. «Climate changes – he adds – have become structural and therefore we must raise the level of guard and change the approach in the management of the olive tree, which must be more rational and sustainable to overcome the production swing».
The fact is that the structural decline in olive oil production in Italy continues which, according to a Nomisma study presented during a Confagricoltura conference, in the last three years (2020-2022) has averaged less than 300 thousand tonnes per year, against the over 500 thousand in the three-year period 2010-2012. And for this year, estimates speak of a production of more than 200 thousand tons. The fault lies not only in the weather but also in the structure of the sector, 42% of which are made up of very small companies with less than two hectares of olive groves, almost for hobby production or intended only for self-consumption. «Even more worrying – says Denis Pantini of Nomisma – are the numbers on investments in which Italy brings up the rear. In fact, between 2011 and 2021, olive grove areas increased by 41.6% in Chile, by 39.5% in Argentina, by 22.6% in Morocco, by 11.4% in Turkey, by 10 .9% in Portugal, 5.4% in Spain, while in Italy they fell by 3.5%”. «In these conditions – fears Pantini – in not many years Italy will remain a marginal player and will be overtaken by new and old protagonists of the oil sector, if we consider that in the last 10 years, while our exports increased by just 3%, that of Turkey grew by 16.4%, Portugal by 14.8%, Tunisia by 9.8%, Chile by 9.7%, France by 8.2%, with a world average of 6.2%”.
Extra virgin olive oil, ever-increasing prices
Extra virgin olive oil, prices continually growing and destined to increase…
August 9, 2023
In 2022, drought caused strong drops in production everywhere. A reduction in expected production is also expected in the 2023-2024 campaign
The 2022 drought has caused production and inventories to collapse, pushing prices higher. Production drops are also expected for the 2023-2024 vintage. Perhaps only from November 2024, if the 2024-2025 campaign turns out to be decidedly better, could they go down
The prices of extra virgin olive oil have increased dramatically in recent months and will continue to increase in the near future. On the shelves of large-scale retail trade, they have grown by an average of 40% compared to 2021. This is what Mario Rocchi, managing partner of Oleificio R.M., says. spa of Lucca, leader in production and marketing, in Italy and abroad (Canada, Germany and elsewhere), as demonstrated by some numbers: total area occupied by the factory: over 18,000 m²; hourly production: 50,000 bottles; storage capacity: 4,600 t; annual production capacity: 50,000,000 litres.
Drought has caused the prices of extra virgin olive oil to skyrocket.
«The main reason for the increase in prices of extra virgin olive oil was the drought which, in 2022, raged in all olive-growing areas of the world and in particular in the Mediterranean olive-growing basin, causing production to collapse – explains Rocchi – . Last year in Italy the conditions for a very unfavorable year, with a 30% drop in olive production, were the anomalous heat, which compromised flowering and fruit set in May, and the water deficit, which from July onwards it damaged the growth of the olives. In Spain, drought and heat waves resulted in a 55% drop in olive oil production in the 2022-2023 year, according to the Ministry of Agriculture: 660,000 tonnes compared to 1.48 million tonnes in vintage 2021-2022″.
Assitol’s warning about low availability and high prices
In addition to the drought, with a reduction in production and stocks, other factors that pushed towards the increase in the prices of extra virgin olive oil at origin and therefore at consumption were the increase in production costs and the global demand greater than supply. Starting from these considerations, already last May the general director of Assitol, Andrea Carrassi, had denounced the scarce availability of olive oil: «The causes of the reduced availability of olive oil, and in particular of extra virgin olive oil , are the last disastrous olive oil year, which was affected by drought and episodes of extreme weather, and by the increases in raw material prices. What we feared at the beginning of the campaign is happening: due to low production, our sector risks not having enough oil available to supply the market in the coming months.”
The limited availability of olive oil, Assitol recently confirmed, taking up the analysis on the olive oil market presented in Brussels by the Civil Dialogue Group, the group of experts of the Agriculture Directorate at the European Commission, has caused the growth in prices throughout Europe, resulting in a further decrease in olive oil consumption, already burdened by inflation.
Fears for the future of the sector were also recently expressed by the managers of Fooi – Italian olive oil supply chain, namely the president Anna Cane and the vice-president Tommaso Lodioice, in a meeting with the undersecretary for Agriculture and food sovereignty, Patrizio Giacomo The stone. In particular, the interprofessional body underlined how the reduced quantity of oil and price tensions have led to the decline in consumption in recent months.
Upward trend confirmed until November 2024
And this trend is destined to be confirmed, claims Rocchi, because even the 2023-2024 olive oil campaign does not promise to be very happy, with drops in production both in Spain (below 50% of its potential) and in Turkey (which has become last year second producing country in the world), both in Italy and elsewhere. This means that medium quality extra virgin olive oil in supermarkets could cost up to 8-9 euros per litre.
«Prices could drop from November 2024, if there is a much better campaign next year. Only at that point could the price of olive oil in general, and that of extra virgin olive oil in particular, fall to the level of two-three years ago.”
What are the production forecasts for Extra Virgin Olive Oil (EVOO) in 2024?
The forecasts of the olive oil campaigns for the oil producing countries are not encouraging for 2024:
In Spain there is hope of reaching 800 thousand tonnes but realists say it will be in line with last year. Spain sold all the olive oil produced in the last olive oil campaign. In seven months of marketing, practically all the oil produced during 2022 was sold. The sales accumulated in this period were 657,000 tonnes, while production was 661.000 tonnes
Italy should exceed 300 thousand tons.
Greece expects the same numbers in 2024 as in 2023 (330 thousand tons).
Turkey and Tunisia should not reach 200 thousand tons.
In addition to these sharply declining numbers, we must consider the inventories which in this scenario would disappear to zero, as they are already at their lowest levels. Considering that the market demand is around 3 million tons, in 2024 it is very likely that there will not be extra virgin olive oil for everyone.
Therefore extra virgin olive oil wholesale prices are expected to be high in 2024 too, as in 2023 (if not higher…).