No rain in Spain pushes olive oil prices to record levels

A scarcity of rain in Spain has pushed costs for olive oil to report ranges, with analysts warning {that a} notably dry summer season may result in even decrease crop yields later this 12 months.

Olive oil costs have surged virtually 60 per cent since June to roughly €5.4 per kilogramme, on the again of a extreme drought in Europe that final 12 months ruined olive crops throughout the continent.

Spain, the most important olive oil producer, was hit notably laborious. The nation’s farmers sometimes produce half of the world’s olive oil, although annual provides have roughly halved to about 780,000 tonnes up to now 12 months.

“In 20 years within the trade I’ve by no means seen these costs”, mentioned Vito Martinelli, grains and oilseeds analyst at Rabobank. Final 12 months “was a catastrophe” for Spain, and the crop in Italy “was additionally unhealthy, together with different international locations within the Mediterranean”. 

2022 marked the driest for Italy since 1800, mentioned Italian information evaluation agency Centro Studi Divulga.

The extended drought circumstances in Spain are casting doubt a couple of manufacturing rebound this 12 months. Final month was Spain’s second warmest March this century and the second-driest, in keeping with the nation’s meteorological company.

April is ready to be the driest on report. The Spanish climate forecaster this week mentioned “not a single drop” of rain fell throughout greater than half of the nation within the first 17 days of April, with rainfall 23 per cent beneath regular because the begin of the hydrological 12 months in October.

Unusually dry climate this summer season may preserve costs elevated. “Sporadic rains in Andalucía and Spain usually usually are not regarded as wherever close to sufficient”, mentioned Kyle Holland, oilseeds and vegetable oils analyst at Mintec, the commodity information agency.

Olive oil is harvested within the Mediterranean space between October and February, which means that “if it doesn’t rain very quickly, we’re going to have a poor crop once more”, Holland added. “Good high quality olive oil provides are additionally lessening as there isn’t a lot round and consumers naturally need good qualities . . . At this tempo, market gamers are saying we can be fortunate to see out the remainder of the season with good oils.”

Others are much less vexed. “The rise in costs, particularly in Spain, is sweet information as a result of lastly, maybe, the race to the underside that has broken all European producers and depressed the entire market is over”, mentioned David Granieri, president of the Nationwide Union of Olive Producers.

“In these circumstances, we imagine that the producers who in recent times have multiplied their efforts to guard biodiversity and produce top quality oils can lastly be valued as they deserve”.

Further reporting by Emiko Terazono in London