According to commodity pricing data from the International Monetary Fund, global olive oil export prices hit a record high at the end of April.
The IMF’s benchmark extra virgin olive oil export price reached US$6,269.63 at the end of April 2023, eclipsing the previous record price of US$6,241.91 in December 1996.
Export prices are largely driven by prices at origin, specifically in Spain, the world’s largest olive oil-producing country.
Poor weather and prolonged drought continue to push Spanish olive oil prices at origin to their highest levels in the past 26 years. Experts predict record-high prices to continue for the foreseeable future.
According to Reuters, dry weather has resulted in 36 months of low rainfall. Scorching conditions have put Spain’s reservoirs at 50 percent capacity.
Spain’s Ministry of Agriculture, Fisheries, and Food said the country produced only 680,000 tons in the 2022-23 crop year compared to 1.5 million tons in the previous one.
Despite recent rain in southern and eastern Spain, forecasts for the 2023-24 crop year remain grim. Without weather changes, industry experts predict the future harvest could produce another poor yield.
John Cancilla, an economist studying olive oil, told The Washington Post that higher prices are slowing demand from American buyers. “Prices are high, but I don’t see any reasons why they are going to come down,” he said.
Along with Spain, which is responsible for nearly half the world’s olive oil production in any given year, sustained drought resulted in poor harvests across the Mediterranean basin, driving high olive oil prices.
According to the International Olive Council, global olive oil production is expected to fall to 2.73 million tons in the 2022-23 crop year, more than 12 percent below the 5 year average, largely due to drought and high springtime temperatures in the Mediterranean basin.
Separate estimates from the United States Department of Agriculture forecast a rebound in production in the 2023-24 crop year to 3.20 million tons. However, USDA economists warned that production might fall below the estimate depending on how the drought in the Mediterranean develops.
Outside of the Mediterranean, California is also struggling with climate change, and like Spain, no relief is in sight.
According to The Washington Post, California farmers are experiencing extremely moist conditions after a deluge of rain. In late winter and early spring, storms blasted through California, producing intense flooding and devastating downpours.
“Weather can make or break the entire season’s production,” Samantha Dorsey, president of McEvoy Ranch in Petaluma, told The Washington Post.
The results are still unknown, as wet conditions may impact a later bloom for the olive crop in California. More