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Supply of olive oil to Europe is expected to significantly increase in the near future, as Spain, the largest producer of this product, is recovering from a drought. It is unclear whether households affected by record olive oil prices will return to this Mediterranean delicacy, the European Commission stated.
It is forecasted that olive oil production in the European Union will reach 2 million metric tons in 2024/2025, which is a third more than the previous season, and 9% higher than the five-year average.
The sharp increase in production in Spain, as well as growth in Greece and Portugal, will outweigh a less favorable harvest year in Italy, the report claims.
Olive oil production in Spain in 2024-2025, according to estimates from the Ministry of Agriculture published last week, is forecasted to increase by 48% to 1.26 million tons. Spring rains stimulated early olive growth, although the final yield will depend on weather conditions in the coming weeks.
It is worth noting that droughts and periods of intense heat in the past two years have led to a reduction in olive oil production in Spain, resulting in the doubling of prices for this product to record highs. As a result, households began to purchase more sunflower oil than olive oil in the first half of 2024, leading to a significant shift in consumption patterns.
According to the Commission's forecast, olive oil consumption in the EU will increase by 7% in 2024/2025 after a two-year decline of 22%. The recovery of supplies is likely to be accompanied by a decrease in prices for this product.
"The main uncertainty for 2024/2025 is how quickly prices will adapt to the increased availability and how consumer habits will change in response to falling prices," the statement said.
The Commission also notes that olive oil exports from the EU are expected to increase by 10%, while imports will decrease by 7%. However, high yields in price-competitive producer countries such as Tunisia and Turkey may mitigate the trade imbalance.
