The Mintec Benchmark Prices (MBP) for Olive Oil Extra Virgin ex-works Andalusia rose to EUR 4.72/kg, up by 16.5% month-on-month (m-o-m) and by 46.6% year-on-year (y-o-y) on 12th October. Adverse weather in Spain (top global producer) has continued to support the MBP, with domestic production for the 2022/23 marketing year (MY) expected to decline by 49.6% y-o-y, to 750,000 tonnes, as reported by the European Commission (EC). The lack of rainfall and high temperatures in Andalusia (key olive oil producing area) are not only impacting output, but are also likely to lead to poorer oil quality.
Accordingly, olive oil production in the European Union is estimated to decline by 25% y-o-y, to 1.7 million tonnes in the 2022/23 MY, primarily attributable to the decline in Spain. Conversely, in Greece, output is projected to rise by 10.1% y-o-y, to 250,000 tonnes. However, labour shortages in Greece could mean that fruit quality is also negatively impacted, thus putting further strain on the global olive oil supply. Given the current situation, olive oil prices are likely to rise further, with Mintec sources reporting prices of EUR 4.75/kg on the week of 17th October. Thus, olive oil consumption could decrease, due to high price levels. Weather conditions and the Russia-Ukraine war continue to remain a watch point, as limited sunflower oil (close alternative) supply amid the latter, could also support olive oil prices.