May Brings Some Relief to Drought-Stricken Olive Oil Regions in Spain, But Harvest Prospects Remain downbeat
At the end of May, crucial olive oil-growing areas in Andalusia, namely Granada, Seville, Cordoba, and Jaen, experienced a significant amount of rainfall, providing a glimmer of hope for the drought-stricken regions. While this rainfall offered temporary relief, industry sources told Mintec they are not optimistic about the harvest's productivity, with many market players expressing the sentiment that the damage has already taken its toll.
The olive groves in Andalusia now rely heavily on a continued stretch of favourable weather patterns throughout the upcoming summer and early autumn. The absence of conducive weather conditions during this critical period could have detrimental effects on the overall yield, intensifying the prevailing uncertainty surrounding the harvest. Market players have submitted estimates for the new olive oil crop with harvests starting in November, at a figure of approximately 620,000 metric tonnes, which is similar to the previous harvest. Should the harvest come in near market players expectations this would fall drastically short of the 1.4 to 1.5 million metric tonnes of olive oil that Spain would produce in a typical year.
The implications of this uncertain harvest have extended beyond the fields and into the market, resulting in a state of stagnation. Both buyers and sellers are exhibiting caution, hesitating to engage in deals. Buyers argue that the recent rainfall should result in lower prices for high-quality extra virgin olive oils, while sellers emphasise the severe shortage of such premium oils.
Market participants continue to closely monitor the weather forecasts, with some buyers hoping for favourable conditions that could salvage the harvest and restore price levels to ‘normal’ values allowing them to potentially shift product blends back to olive oil.