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Olive Oil Prices Set to Drop as Two-Year Drought Comes to an End
After two years of severe drought, olive oil prices are expected to decline as production in Spain rebounds.
Spain, one of the world’s largest olive oil producers, suffered a 60% drop in olive oil output last year due to consecutive summer droughts. However, improved weather conditions are anticipated to yield a stronger harvest, which will likely result in lower prices as production stabilizes.
CaixaBank Research economist Pedro Álvarez Ondina explained that the drought and rising production costs, due to the energy-intensive nature of olive oil production, have severely impacted the industry. But with more favorable weather, the situation is improving, leading to hopes for a recovery in the sector.
In May, prices for extra virgin olive oil had surged to over £16 per liter, following a global production slump to its lowest levels in over a decade. The improved harvest outlook is expected to alleviate some of these price pressures, providing relief to consumers and the olive oil market.
This situation echoes challenges in other food categories, with citrus greening disease threatening to drive up orange juice prices as well.