W10 Olive and Olive Oil Update: EU's 50% YoY Price Surge and Spain's 16% YoY Production Increase

Published 2024년 3월 15일

In W9 in the olive and olive oil landscape, the EU is grappling with a sharp rise in olive oil prices, surging by 50% YoY in Jan-24, following a consistent uptrend since the H2-23, peaking at a 51% YoY increase in Nov-23. Southern European olive oil producers such as Spain, the largest in the world, Portugal, and Greece are particularly affected, experiencing significant price hikes. Unfavorable weather conditions, including extreme heat waves, led to reduced harvests, notably evident in Spain, where domestic olive oil production has halved. Additionally, the EU's rejection of certain Indonesian CPO shipments due to deforestation concerns adds to supply constraints, potentially exacerbating olive oil price hikes. Despite Spain surpassing initial production estimates in the 2023/24 season, the industry anticipates ongoing price increases, as reflected by a 15.9% YoY rise in domestic sales amid a 12% YoY decrease in exports.

EU Olive Oil Prices Soar Amidst Production Shortfall

The European Union (EU) is experiencing a significant surge in olive oil prices. This trend began in H2-23 and has continued into 2024. Data from EUROSTAT, the statistical office of the EU, reveals a 50% year-on-year (YoY) increase in olive oil prices across the EU in Jan-24. This follows consistent increases throughout 2023, reaching a peak of 51% YoY in Nov-23. Olive oil inflation is particularly pronounced in Southern European producer countries like Portugal (69.1% YoY increase), Greece (+67% YoY), and Spain (+62.9% YoY), the world's largest producer and exporter of olive oil. While price increases were observed across the EU, Romania (+13% YoY), Ireland (+16% YoY), and the Netherlands (+18% YoY) experienced less dramatic rises compared to Southern Europe.

EUROSTAT’s previous media reports suggest a link to unfavorable weather conditions, including extreme heatwaves in olive-producing regions, which likely led to reduced harvests and caused the price surge. Spanish Ministry of Agriculture data confirms a significant decline in domestic olive oil production, falling by more than half to 675 thousand metric tons (mt) in the 2022 to 2023 agricultural year.

The EU's rejection of certain Indonesian crude palm oil (CPO) shipments due to deforestation regulations is highly likely a contributing factor. CPO could potentially serve as a substitute for olive oil, and its restricted availability due to EU regulations may be limiting options and further elevating olive oil prices. Spanish officials anticipate olive oil production to remain below average levels in 2023-2024, suggesting continued price hikes. Industry experts predict that price reductions are unlikely before 2025.

Spanish Olive Oil Production Exceeds Estimates Despite Marketing Challenges

Data from the Spanish Ministry of Agriculture shows a mixed view of Spain’s 2023/24 olive oil season. Olive oil production in Spain has surpassed initial estimates, reaching 775.3 thousand mt by the end of Jan-24. This represents a YoY increase of 16% compared to the previous season's volume of 665.8 thousand mt. While exceeding past performance, current production remains below historical levels. The current production level is slightly higher than the revised estimate of 766 thousand mt for the season and significantly exceeds the volume obtained at the same time last season.

Domestic sales of olive oil in Spain have exhibited a positive trend, rising by 15.9% YoY to reach 145.8 thousand mt in the first four months of the season (Oct-23 to Jan-24). Despite recovering domestic demand, overall marketing has been impacted by a 12% YoY decrease in exports, bringing the total export volume to 232.2 thousand mt. Olive oil stocks at the end of Jan-24 stood at 734.4 thousand mt, reflecting a slight decrease compared to 763.6 thousand mt. Imports of olive oil into Spain have risen by 10.5% YoY to reach 89 thousand mt in the first four months of the campaign.