The olive oil market is set for change as Spain’s drought ends, impacting prices and supply.
- A significant drop in olive oil production occurred due to Spain’s prolonged drought, which is now abating.
- Improved weather conditions suggest a promising harvest in Spain, potentially lowering olive oil prices.
- The recent drought significantly increased production costs within the olive oil industry.
- Other agricultural sectors, like orange juice production, also face challenges, highlighting broader supply chain issues.
The olive oil industry anticipates a shift as Spain’s two-year drought concludes, potentially stabilising prices. The adverse weather previously led to a substantial 60% reduction in Spain’s olive oil production, which has had global repercussions on supply and pricing.
With favourable weather now aiding Spanish growers, expectations of an increased harvest are high. Such improvements in weather conditions are projected to alleviate the mounting costs and supply constraints faced by the industry.
Economist Pedro Álvarez Ondina has highlighted that the drought, coupled with rising energy costs, posed a major challenge for the olive sector. However, the first indications of recovery due to better weather have been noted, providing some optimism for growers and consumers alike.
Earlier this year, the market witnessed extreme price projections for extra virgin olive oil, reaching up to £16 per litre due to dwindling global production levels. This was a notable increase from the £14 per litre recorded earlier, reflecting the serious supply shortfalls.
In addition to the olive oil sector, other industries are experiencing supply chain strains, such as the citrus market, where a disease outbreak is anticipated to elevate orange juice prices.
The improved weather in Spain offers hope for easing olive oil prices and supply challenges, though other sectors remain pressured.