As you may already know, there is a critical olive oil situation in Europe, which is being driven by drought conditions and elevated temperatures. Chex Finer Foods is diligently following the situation, and is in close contact with our producers and other stakeholders in the industry.
The continued scorching heat and flash floods in Southern Europe are further pressuring Extra Virgin Olive oil prices to continue to rise. Global olive oil prices have hit $5,989.8 per metric ton and according to data from the International Monetary Fund, olive oil prices are now at a 26-year high.
Chex Source: cnbc.com
Ongoing climate disasters with extended high temps and severe droughts have severely impacted the olive yields in the 2021 and 2022 harvests. There is deep concern that if the drought continues it will be a 3rd consecutive poor harvest, which will exacerbate the current situation and potentially impact future tree yields due to failing trees. The recent spike in prices is being driven by an early heat wave in Spain, with an average of 101.84 F. This coincided with the period when the trees usually blossom and subsequently there is deep concern about the impact on their ability to bear fruit this fall.
Olive oil production in Spain alone (the majority contributor of Olive oil to the global market) dropped a staggering 55% last year. Even through some areas like Italy and Tunisia had decent harvests, they are not enough to offset Spain’s shortfall.
“Drastically lower yields in the country, usually responsible for almost half of global production and annual exports of nearly €3 billion, have resulted in rising prices across the olive oil sector supply chain. Due to its immense size, prices in Spain largely dictate prices in other international markets.” (Source: oliveoiltimes.com)
Because of these factors, olive oil prices have hit record highs and through the prolonged drought, the costs are anticipated to stay elevated for the near future. Pricing is already up 50% on the market in the last 6 months. Retailers should prepare for a tight market for the foreseeable future and the only antidote will be reduced global consumption. The possibility exists for continued high prices (20-30% now) or additional price increases if adverse weather events impact the start of the new crop; these market conditions may persist for an extended period of time.
Chex Senior Category and Brand Development Manager Nick Simmons says "It is likely that prices and promotional support will continue to be pressured, so suppliers, distributors, and retailers need to work together to manage SRPs at shelf until things normalize, which may not be in the near future. We will continue to work closely with our suppliers to navigate these unprecedented times and together we will get through the best we can. "