Jure Susac, a Bosnian olive farmer from the western-Herzegovinian town of Ljubuski, delivers his pickings to an oil-mill in Capljina, during harvest season, on October 29, 2022.
Elvis Barukcic | Afp | Getty Images
Spain’s Deoleo, the world’s largest olive oil producer, says one of the most challenging moments in the industry’s history appears to be drawing to a close, with “liquid gold” prices expected to nearly halve from an all-time high over the coming months.
A prolonged period of climate-fueled extreme weather and drought in southern Europe has severely impacted olive harvests in recent years, culminating in a dizzying price rally that shocked industry veterans and consumers alike.
The shortage of olive oil, a superfood staple of the Mediterranean diet, pushed the industry into crisis mode, stoked food insecurity fears and even prompted a crime surge in Spanish supermarkets.
Prices have since cooled, however, as industry estimates point to significantly improved harvests in the 2024-2025 season, particularly in key producing countries such as Spain, Greece and Tunisia.
“Although there have been steps towards improvement, it would not be entirely accurate to say that the crisis is over,” Miguel Ángel Guzmán, chief sales officer at Deoleo, told CNBC via email.
“We are still going through a phase of tension in olive oil prices, especially in the higher quality oils, such as Extra Virgin,” Guzmán said, noting that there is still some market uncertainty ahead of the olive harvest for the 2024-2025 season.
“However, the outlook is positive for the coming months, as the market is expected to begin to stabilize and normality is expected to be gradually restored as the new harvest progresses and supply increases,” Guzmán said.
‘A gradual normalization’
Deoleo, the maker of household olive oil brands such as Bertolli and Carbonell, described a perfect storm of challenges as “one of the most difficult moments in the history of the sector” over the summer and called for a “profound transformation” of the industry.
Extra virgin olive oil prices in Spain’s Andalusia stood at 6 euros ($6.33) per kilogram as of Nov. 6, according to Expana, an agricultural and food-focused market intelligence firm. That’s down around 19% on a monthly basis and nearly 35% off a record high of 9.2 euros in January.
Spain accounts for more than 40% of the world’s olive oil production, making it a global reference for prices.
A person holds a bottle of olive oil on June 21, 2024, in Barcelona, Catalonia, Spain.
Europa Press News | Europa Press | Getty Images
“The relaxation of prices at origin is expected to begin between November, December and January, provided that weather and harvest conditions remain stable in the coming weeks,” Guzmán said.
“Indications are that if everything develops normally, especially if rains continue to favor production, we could see a downward trend in prices throughout 2025,” he added.
Deoleo said olive oil prices should fall to around 5 euros per liter, a steep drop from highs of 9 to 10 euros, which had become the norm in Spanish supermarkets this year.
“This price would be reasonable in a context of increased production, which would ease market tensions and facilitate a gradual normalization of prices after a period marked by volatility,” Guzmán said.
‘An existential threat to the industry’
Kyle Holland, senior market reporter for oilseeds and oils at Expana, said most industry players were “very, very bearish” regarding the price outlook.
“The production numbers are key. For Spain, we’re looking at probably 1.3 million metric tons, compared to last season’s 670,000 to 680,000 metric tons, depending on who you speak to, so not far from double basically.”
Alongside Spain, Expana’s Holland said bumper olive harvests were expected in Greece, Tunisia and Turkey, noting that the quality of the olives appeared to be “very good,” too.
“Most people are very, very bearish. They don’t see how the prices can move up with the amount of supply we have,” he added.
An aerial view of agricultural workers washing the grapes, with a mixture of water, olive oil and potassium carbonate called “posata” to make them look brighter and protect them from the burning rays of the sun in Menemen Plain of Izmir, Turkiye on August 27, 2024.
Anadolu | Anadolu | Getty Images
Deoleo’s Guzmán said two consecutive years of drought has fomented concern in the industry, “which is facing the need to adapt to an increasingly uncertain future due to climate change.”
In response to this challenge, Guzmán said the olive oil sector is undergoing significant investments in new agricultural technologies and to develop more resilient olive varieties.
“This is crucial, as climate change has been identified as an existential threat to the industry,” he added.