Olive oil prices have surged worldwide due to low supplies driven by off-year growing cycles and extremely dry weather in much of the Mediterranean, according to a report by the United States Department of Agriculture (USDA).
At the time of the September report, global olive oil prices topped US$8,900/tonne.
The average price in August was 130% higher than the previous year, with prices quickly overtaking the previous record of US$6,242/tonne set in 1996 and with no sign of easing, according to the Oilseeds: World Markets and Trade report.
Prices had risen steadily since the extent of the damage to the harvest became apparent, the USDA said.
However, more recent concerns over supplies in Spain – typically 45% of global exports – had caused prices to surge further as the market attempted to ration supplies towards the end of the marketing year, according to the Foreign Agricultural Service (FAS) report.
“As a result, olive oil consumption is forecast flat or down in 2022/23 for every … country except Turkey, where the government recently banned bulk olive oil exports in an attempt to ensure domestic supplies and alleviate price pressure even with record domestic production,” the USDA said.
At the time of the report, the UDSA had revised its forecast for 2022/23 global olive oil production down to 2.5M tonnes, a quarter lower than both the previous year and the five-year average.
“Concerns over production in 2023/24 are also exacerbating the price spike as hot and dry conditions develop in the Mediterranean once again,” the USDA said.
“While prices have moderated consumption somewhat, consumer and cultural preferences for olive oil make it difficult to substitute despite plentiful supplies of other vegetable oils.”
Although surging prices would help keep demand down this season, stocks carried over to the next year would be scarce, particularly in the European Union (EU) – the largest olive oil producer, consumer, and exporter – and this would lead to higher prices into the 2023/24 marketing year, especially if the next harvest was similarly impacted by poor conditions, the report said.
“More price-sensitive exporters in the Middle East and North Africa tend to reduce olive oil consumption in favour of the high prices offered on the export market. Less price-sensitive buyers, however, have proven that their preference for olive oil holds relatively more inelastic as prices have risen,” the USDA said.
For example, US imports usually make up around 30% of global olive oil trade, but this year are forecast to be 35% and 37% in 2023 and 2024 respectively, according to the report.
