Olive Oil Production in the EU Forecasted Down by 34% in the 2022–23 Marketing Year

After an uptick in EU olive oil production from 2.04 million mt in 2020-21 to 2.27 million mt in the 2021-22 crop year, production is forecasted to plunge by 34% to 1.50 million mt in the 2022-23 season. Last season's output of 2.27 million mt is the highest recorded in 5 crop seasons. Similarly, global olive oil production which came in at 3.39 million mt in the 2021-22 marketing year is the highest recorded over the last five years driven by an increase in both EU and non-EU production.

World production in the 2022-23 marketing year is also forecasted to fall by 23% to 2.62 million mt while that of the non-EU producers is expected to be relatively stable YoY. It thus goes without saying that a reduction in the global crop output is coming from downward revisions of the EU crop.

The diminution in production in the EU in 2022-23 is predicted to be strong with the biggest losses coming from Spain, whose production is expected to be down 48% from 1.49 million mt to 0.78 million mt. This is followed by Portugal whose production from the 2021-22 year has been revised downwards by 39% to 0.125 million mt. Italy, another large consumer of olive oil in the EU is forecasted down 29% to 0.235 million mt from 0.329 million mt the previous year.

The only exception is Greece which is expected to have a record season with increased yields particularly down the areas spreading the coastal region of Crete. Greece recorded better weather conditions last summer compared to that which prevailed in other EU Mediterranean countries. Production in several olive oil-producing districts in Greece is thus expected to rebound pushing total production in Greece in the 2022-23 marketing year up 51% to 0.35 million mt from 0.23 million mt recorded the previous year. That is however not enough to offset the losses in other producer countries.

Looking at both the supply and demand sides of the balance sheet, the 2022-23 marketing year would be tighter than normal: the season begins with stocks of 0.67 million mt with a production of 1.50 million mt and imports of 0.2 million mt making total supply 2.37 million mt. On the demand side, consumption for the 2022-23 year is estimated to be around 1.41 million mt with 0.59 million mt of olive oil expected to be exported leaving ending stocks of 0.38 million mt way below the EU 5-year average of 0.67 million mt.

The fundamental picture is somehow bleak in the near term which is expected to push olive oil prices up towards the end of the first quarter of 2023. However, that price direction may change when harvesting kicks in and sentiments around an expected rebound in stocks according to the EU Commission begin to emerge.