Drought has affected the Spanish olive crop and forecasters estimate a 30-40% reduction in olive oil yield for the coming harvest. However, this drop in production is to some extent counterbalanced by carryover stocks from the previous record harvest.
International Olive Council data shows in 2011/12 production exceeded consumption. The shortfall in the Spanish crop is expected to return the balance between production and consumption.
Olive oil is part of a group of oils used in cooking and salad dressings. According to forecaster Oil World (www.oilworld.biz) production of these oils will fall up to 18% in the next year.
In anticipation of these shortfalls olive oil prices have jumped significantly. According to Oil World, ‘Domestic prices in Spain for extra-virgin olive oil rose 40 percent from June to about 2,400 euros a ton in September last week, and could surpass the previous March 2008 high of 2,633 euros to climb to at least 2,800 to 3,000 euros a ton’.
Italy’s olive-oil production, the world’s second-largest, is seen climbing to 540,000 tons from 518,000 tons, while output in Greece may advance to 355,000 tons from 335,000 tons’.
World consumption of olive oil is forecast to stagnate in 2012-13 after climbing for six consecutive years. “It can be expected that consumption of olive oil will be affected by the prospective high prices and the widening of the price premiums relative to sunflower oil and other vegetable oils,” according to Oil World. (Source Bloomberg and Oil World)