Global olive oil prices to stay high as Spain's heatwaves hit exports

Refined olive oil prices from Jaen, the Spanish benchmark, rose by over 8% in June from the previous crop year, according to the International Olive Council. 

Relentless heatwaves blasting Spain this summer threaten to sink production of olive oil from the world’s top exporter of the cooking ingredient, according to Agriculture Minister Luis Planas.

“If there is no temperature relief or rains in the coming weeks, this year’s olive harvest could be notably lower than previous ones,” said Mr Planas in an interview, declining to give an exact output estimate. 

“The olives sector is concerned about oil production,” he said.

Less olive oil coming out of Spain, which represents nearly half of global production, and continued disruption to the supply of sunflower oil from Ukraine will likely keep the prices of vegetable oils high, Mr Planas said. 

Refined olive oil prices from Jaen, the Spanish benchmark, rose by over 8% in June from the previous crop year, according to the International Olive Council. 

That’s part of a wider picture of disruption to flows of agricultural produce with hot weather across large swathes of Europe poised to curb grains output at a time when global food prices are near record levels following Russia’s invasion of Ukraine. 

Mr Planas estimates Spain’s overall production of grains including corn, wheat and barley, could fall as much as 13% this year to 17.5 million tonnes as a result of the high temperatures and scarce rains.

Global olive oil production is expected to drop by 11% to 2.9 million metric tones in the 2022-2023 crop years, according to the US Department of Agriculture. 

Olive oil is Spain’s third biggest agri-food export with a median output of 1.3 million metric tonnes per year.

Food prices could still get some relief if Russia abides by a deal to allow Ukraine to ship grains from three ports in the Black Sea, according to Mr Planas. He added that Spain has received only a handful of shipments of Ukrainian grain using alternative routes since the invasion six months ago. 

Bloomberg