Global Production May Exceed Expectations, but Not Enough to Move Prices

Analysts predict climate change will result in new price dynamics, with high-quality extra virgin olive oil and other market segments behaving differently.

Olive oil production in Spain and Italy exceeded initial estimates, meaning that the European Union now expects slightly higher yields than originally anticipated in the 2023-24 crop year.

These better-than-expected harvests combined with a wet winter have resulted in a slight reprieve in the olive oil market, reflected by lowering prices at origin from mid-January’s record highs.

However, analysts warn that the 2022-23 and 2023-24 crop years may be the start of a new trend in olive oil prices and economics, in which high-quality extra virgin olive oil and other market segments begin to behave differently.

According to the Spanish Ministry of Agriculture, Fisheries and Food, olive oil production reached 845,000 tons. This revised estimate marks a ten percent increase from the initial forecast of 765,362 tons made at the start of the harvest.

As a result of this adjustment, Spain’s olive oil output is now expected to surpass the previous season’s modest achievements by 27 percent. Despite these increases, production volumes are anticipated to be approximately 33 percent below the average of the past ten years.

With the addition of 215,000 tons of imports, these quantities are deemed sufficient for local producers to satisfy domestic olive oil demand, estimated at 400,000 tons, and export requirements, forecasted at 708,172 tons. By the end of the crop year, olive oil stocks are expected to stabilize at 200,000 tons.

Italy, the EU’s second-largest olive oil producer, is also expected to outperform its initial projections.

The European Commission’s latest data indicate that Italian olive oil production in the current season will be 330,000 tons.

This estimate is 37 percent higher than the previous season, almost two percent above the average of the last ten years and marginally surpasses the commission’s initial prediction of 324,000 tons. Italy’s ending stocks are projected to remain at 140,000 tons.

Collectively, the EU‘s updated figures now show a total production of 1,488,000 tons for the current campaign. This quantity exceeds the 1,392,300 tons of the preceding season, yet it remains notably lower than the decade’s average production of 1,860,000 tons.

Globally, the commission now indicates that olive oil production for the 2023-24 crop year is projected to reach 2,490,000 tons. More