Olive oil prices could increase

Olive oil prices could rise by 25% as heatwave hits production

Olive oil prices will rise as heatwaves hit production in Spain, according to Acesur, a supplier to the UK’s largest supermarkets. Customers could see a 20% to 25% increase in prices. Spain produces almost half of the world’s olive oil. But the country, along with other parts of Western Europe that produce olive oil, including Italy and Portugal, has experienced extreme temperatures and a lack of rain in recent weeks.

Extreme heat bakes Western Europe

Acesur is involved in the production of more than 200,000 tons of olive oil annually, of the approximately 1.4 million tons produced in Spain annually, and sells its products in more than 100 countries. It sells around 20,000 tons annually in the UK and packages its own brands for Sainsbury’s, Tesco, Waitrose, Morrisons, and Asda. The supermarkets also carry its La Española brand, which is the third largest in the UK.

Most of the olives in its products are grown in Andalusia, which has had very little rainfall in recent weeks. The heat wave’s impact on production has been “drastic.” Last year, Spain produced around 1.4 million tons of olive oil, but now they are forecasting only 1 million tons for this season. He added that the dry weather could also affect next season’s harvest if olive trees are unable to grow new branches due to a lack of water. This is having an impact on global prices. In July, Mintec’s reference price for extra virgin olive oil rose to its highest level so far this year, up 7.3% from the previous month and 14.2% year-on-year, according to the market research group. This will eventually be reflected in prices for customers, although there would be a delay of three to four months because many companies would have already signed 12-month contracts with retailers. However, companies will eventually have to raise their prices when they renew contracts, and customers could see increases of 20 to 25%. Italy’s olive harvest has also been reduced by heatwaves and drought. The average price of own-brand olive oil at the UK’s four largest supermarket chains was up 50.2% year-on-year at the beginning of August, according to retail research firm Assosia. From June to July, average prices increased by 28.5%. In fact, in July, Italy declared a state of emergency in five northern regions surrounding the Po River as it experienced its worst drought in 70 years. If the dry weather continues, prices could rise further. However, if the agreed-upon grain corridor from Ukraine leads to more supplies of sunflower oil leaving the country, this could bring some relief. The disruption to sunflower oil supplies from Ukraine also contributed to dramatic price increases, as people turned to olive oil as an alternative and increased demand. Ukraine was the world’s leading exporter of sunflower oil.