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No rain in Spain pushes olive oil prices to record levels

An absence of rain in Spain has pushed costs for olive oil to document ranges, with analysts warning {that a} notably dry summer season might result in even decrease crop yields later this yr.

Olive oil costs have surged virtually 60 per cent since June to roughly €5.4 per kilogramme, on the again of a extreme drought in Europe that final yr ruined olive crops throughout the continent.

Spain, the biggest olive oil producer, was hit notably onerous. The nation’s farmers sometimes produce half of the world’s olive oil, although annual provides have roughly halved to about 780,000 tonnes prior to now 12 months.

“In 20 years within the business I’ve by no means seen these costs”, stated Vito Martinelli, grains and oilseeds analyst at Rabobank. Final yr “was a catastrophe” for Spain, and the crop in Italy “was additionally unhealthy, together with different nations within the Mediterranean”. 

2022 marked the driest for Italy since 1800, stated Italian knowledge evaluation agency Centro Studi Divulga.

The extended drought situations in Spain are casting doubt a couple of manufacturing rebound this yr. Final month was Spain’s second warmest March this century and the second-driest, based on the nation’s meteorological company.

April is about to be the driest on document. The Spanish climate forecaster this week stated “not a single drop” of rain fell throughout greater than half of the nation within the first 17 days of April, with rainfall 23 per cent beneath regular because the begin of the hydrological yr in October.

Unusually dry climate this summer season might maintain costs elevated. “Sporadic rains in Andalucía and Spain basically aren’t regarded as anyplace close to sufficient”, stated Kyle Holland, oilseeds and vegetable oils analyst at Mintec, the commodity knowledge agency.

Olive oil is harvested within the Mediterranean space between October and February, which means that “if it doesn’t rain very quickly, we’re going to have a poor crop once more”, Holland added. “Good high quality olive oil provides are additionally lessening as there isn’t a lot round and patrons naturally need good qualities . . . At this tempo, market gamers are saying we can be fortunate to see out the remainder of the season with good oils.”

Others are much less vexed. “The rise in costs, particularly in Spain, is sweet information as a result of lastly, maybe, the race to the underside that has broken all European producers and depressed the entire market is over”, stated David Granieri, president of the Nationwide Union of Olive Producers.

“In these situations, we imagine that the producers who in recent times have multiplied their efforts to guard biodiversity and produce prime quality oils can lastly be valued as they deserve”.

Further reporting by Emiko Terazono in London