Global olive oil prices soared to new record highs in September as severe droughts in major producing countries cut supplies.
Olive oil prices have risen to 8,900 dollars per tonne, with the US Department of Agriculture (USDA) attributing the development to “extremely dry weather.” Already, the average price in August was 130 percent higher than a year earlier and showed “no signs of easing,” the USDA said.
The drought in Spain and Turkey’s stance
Spain, the world’s largest producer and exporter of olive oil, has been hit by a severe drought for months. The country also recorded its third warmest summer, with the average summer temperature 1.3°C above normal, according to the state meteorological service AEMET.
Turkey’s decision to suspend bulk olive oil exports has further complicated the issue. The suspension has exacerbated already tight volumes in Spain.
According to data from independent provider of global commodity price data firm Mintec, olive oil production in Spain fell to around 610,000 tonnes – a drop of more than 50% compared to the usual 1.3 to 1.5 million tonnes.
Greece and Italy
“Concerns about reduced production in other major European olive oil producing countries, including Italy and Greece, where drought conditions prevail, make things worse,” Mintec analyst Kyle Holland told CNBC.
Greece and Italy round out the world’s top three olive oil producers, according to the International Olive Council, an intergovernmental organization whose members account for more than 98% of the world’s olive oil production.
When will the olive oil crisis end?
There is no light on the horizon. Holland warned that if olive oil stocks continue to be depleted by the drought, stocks could run out before October, when fresh harvests are usually available.