Olive oil

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The olive oil sector has been under extreme pressure the past few years due to drought conditions across the Mediterranean

Following years of disastrous harvests, olive oil forecasts have pointed to a bumper crop across the Mediterranean this summer.

Extreme drought conditions in big olive oil-producing countries such as Spain, Italy and Portugal have led to a successive drop in yields in the past three years.

Spanish olive oil production slumped from 1.5 million tonnes in 2021/2022 to around 660,000 tonnes in the 2022/2023 season, according to International Olive Council data.

But favourable weather conditions across southern Europe are now giving suppliers some hope for the upcoming harvest.

“There has been a very good flowering in Spain and at the moment climatic conditions are also ideal for the setting of the fruit,” said Filippo Berio UK MD Walter Zanre.

“Greece, Tunisia and the eastern end of the Mediterranean are all forecasting good crop prospects.

“Flowering in Italy has been a bit patchy and some areas have depressed forecasts,” he added, with Tuscany “not looking good”.

But overall “it’s looking like a bumper crop in the Mediterranean”, Zanre said.

Market players in Spain surveyed by Mintec now predict a production range of 830,000-850,000 tonnes, marking an increase of approximately 40,000 tonnes from previous estimates in early March.

This provides much-needed relief to the olive oil markets, which have seen prices spike in the past couple of years.

Prices were now expected to begin declining as the markets approach the next harvest in October, Zanre said, “provided that the outlook for the next crop remains positive”.

Commodity analysts at Mintec confirmed that an uptick in production estimates for Spain’s 2023/24 season had partly driven the downward trajectory that commodity prices had experienced in recent weeks.

The Mintec Benchmark Price showed Andalusia extra virgin olive oil settling at €7.80/kg at the end of April, a marked decline from its unprecedented price of €9.20/kg in January.

However, market prices don’t necessarily translate into retail prices as there is still plenty of volatility in the sector in the coming months.

Concerns remain amid suppliers, who have warned that olive oil stocks could run dry before the next harvest season.

“There is insufficient oil to cover September and October requirements,” Filippo Berio’s Zanre warned.

“New season oil will not be available until November/December, so the supply situation is going to be critical – the olive oil in the Mediterranean is insufficient to cover consumption until October. Someone is going to run out before the new crop.”