Olive oil prices in Europe continue to fall amid a significant increase in production

Olive oil supplies in Europe may increase significantly next year as Spain resumes production after a drought, the European Commission reports. However, it is not known whether households that abandoned it due to record high prices will return to consuming this oil.

According to forecasts, in 2024/25 MR, olive oil production in the EU will grow by 31% compared to the previous season to 2 million tons, which will exceed the 5-year average by 9%, as the not very good harvest in Italy will be compensated by the increase in production in Spain, Greece and Portugal.

Thus, Spain, the largest producer of olive oil in the EU, will increase its production this year compared to 2023 by 48% to 1.26 million tons thanks to spring rains that stimulated the early development of olives. The country's authorities warn that the final harvest will depend on weather conditions in the coming weeks, but "prices will be lower than in 2023, as volumes are almost double last year's".

Olive oil prices hit record highs after two poor years, but are now down 20% on data of improved yields. However, prices for consumers will decrease much later.

Last year, oil producers were paid 10 €/l, and now prices have fallen to 8 €/l and continue to fall. We will remind that in Andalucia (where 80% of Spanish oil is produced), the prices for the first cold pressed oil rose from 3.5-4 €/kg in 2021 to a record 10 €/kg in 2023.

Against the background of a significant increase in the price of olive oil, some households switched to the consumption of cheaper sunflower oil in 2024, which dramatically changed consumption patterns.

According to the forecasts of the European Commission, the consumption of olive oil in the EU, after a reduction of 22% over the last two years, will grow by 7% in 2024/25 MR, and the restoration of supplies will lead to a further decrease in prices. But it is not yet known how quickly prices will respond to increased availability and consumers will change their consumption habits.

Also, the European Commission expects that the export of olive oil from the EU will grow by 10%, and the import will decrease by 7%, but good harvests in the competing countries (Tunisia and Turkey) may restrain the rebalancing of trade.