After 18 months at rock bottom, olive oil wholesale prices are soaring and suppliers are warning of inevitable price hikes in-store.
Olive oil has been extraordinarily cheap recently because of unusually large crops in key EU countries, particularly Spain. But drought means the upcoming crop for 2012/13 is expected to be much smaller, with Spain’s output currently forecast to be down 40%, from 1.6 million tonnes to less than one million tonnes, on last season.
In an average year, Spain typically produces about 1.2 million tonnes of olive oil. The output from Greece and Italy is also forecast to be smaller.
Because of last year’s larger than expected harvest, there was quite a lot of carryover stock in the Med earlier this year, which helped keep a lid on price rises despite the poor forecasts for next season. But Greece and Italy have now sold out of carry-over stock, with the remainder concentrated in Spain. This had pushed up prices significantly, said Filippo Berio UK MD Walter Zanré. “It’s all in the hands of the Spanish now,” he added.
Commodity risers and fallers 8 September 2012
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Since the end of June, extra virgin olive oil prices have gone up 30% to about €2,750/t, according Zanré. “Everyone goes on holiday in August and there was some hope prices would settle down again in September, but that hasn’t happened - prices are still rising,” he said. “It also means it’s almost impossible to buy because everyone who has stock is sitting on it hoping the price will go up even further.”
Shortages on UK supermarket shelves were unlikely, Zanré said, but he expected wholesale prices to continue rising until November or December, when next season’s oil becomes available. Retail prices would have to respond, he added, although it was not yet possible to say by how much. “The price rises are such that they will have to be passed on.”