The prices of olive oil have risen worldwide due to low supply caused by off-year growing cycles and extremely dry weather across much of the Mediterranean, according to a report from the United States Department of Agriculture (USDA).
At the time of the September report, global olive oil prices reached US$ 8,900/tonne.
The average price in August increased by 130% compared to the previous year. Prices now surpass the record of US$ 6,242/tonne set in 1996. The “Oilseeds: World Markets and Trade” report does not indicate any sign of slowing down.
Prices have risen steadily since the extent of crop damage became apparent, the USDA said.
However, more recent concerns have emerged about supplies in Spain. Typically, the country is responsible for 45% of global exports. This led to an increase in prices. The market is trying to manage supply at the end of the marketing year. This information comes from the Foreign Agricultural Service (FAS) report.
“As a result, consumption of olive oil is forecast flat or low in 2022/23 for all countries except Turkey, where the government recently banned bulk olive oil exports in an attempt to secure domestic supplies and ease price pressure, even with record domestic production “, said the USDA.
Global Olive Oil Outlook in 2022/23 and Beyond
At the time of the report, the USDA had revised its forecast for global olive oil production in 2022/23. That forecast was 2.5 million tons, a quarter less than the previous year and the five-year average.
“The USDA has expressed concerns about production in 2023/24. This is exacerbating price increases due to hot and dry conditions in the Mediterranean once again.”
Prices, although moderate, affect consumption. Consumer attachment to olive oil makes it difficult to switch, despite other vegetable oils being abundant.
While rising prices will help keep demand low this season, stocks carried over to next year would be scarce, particularly in the European Union (EU) – the largest producer, consumer and exporter of olive oil – and this would lead to lower prices. highs in the 2023/24 marketing year, especially if the next harvest was similarly impacted by poor conditions, the report said.
“More price-sensitive exporters in the Middle East and North Africa tend to reduce their consumption of olive oil in favor of the high prices offered on the export market. Less price-sensitive buyers, however, have proven that their preference for olive oil is relatively more inelastic as prices increase,” the USDA stated.
For example, US imports typically account for about 30% of global olive oil trade, but this year they are forecast to account for 35% and 37% in 2023 and 2024, respectively, according to the report.
Source: Oils & Fats International
