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} significantly dry summer time may result in even decrease crop yields later this yr.

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

Spain, the most important olive oil producer, was hit significantly exhausting. The nation’s farmers usually 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 business I’ve by no means seen these costs”, mentioned Vito Martinelli, grains and oilseeds analyst at Rabobank. Final yr “was a catastrophe” for Spain, and the crop in Italy “was additionally unhealthy, together with different nations within the Mediterranean”. 

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

The extended drought situations in Spain are casting doubt a couple of manufacturing rebound this yr. Final month was Spain’s second warmest March this century and the second-driest, in response to the nation’s meteorological company.

April is about 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 for the reason that begin of the hydrological yr in October.

Unusually dry climate this summer time may maintain costs elevated. “Sporadic rains in Andalucía and Spain normally will not be regarded as wherever close to sufficient”, mentioned Kyle Holland, oilseeds and vegetable oils analyst at Mintec, the commodity knowledge 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 shall 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 situations, we consider 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

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