Olive oil is a type of oil that is extracted from olives, the fruit of the olive tree (Olea europaea). Mediterranean countries such as Spain, Italy, and Greece have traditionally been the largest consumers of olive oil due to its integral role in their cuisine. However, olive oil consumption has been steadily growing in other regions and countries worldwide, driven by increasing awareness of its health benefits and culinary versatility.
Olive oil is produced in several countries around the world, but the largest producer is Spain, which has a long history of olive cultivation and produces a wide range of olive oil varieties.
Andalusia is the largest olive oil-producing region in Spain and the world. Within Andalusia, provinces such as Jaén, Córdoba, Sevilla, Granada, and Málaga are particularly renowned for their olive oil production. Jaén, in particular, is often referred to as the "World Capital of Olive Oil" due to its vast olive groves and high-quality production.
Catalonia is another significant olive oil-producing region in Spain. Within Catalonia, areas such as Tarragona and Lleida are known for their olive oil production.
Both of these areas in Spain have been hit hard by a sever drought this year. As a result, the latest olive harvest season has the lowest crop yields in 26 years. “This is the worst period that we have had for the last 100 years,” Samuel Reyes, director of the Catalan Water Agency, told CNN.
As a result, olive oil prices have skyrocketed to $6,269 per metric ton, up 46% from last year. This is the highest price since 1997.
Olive oil demand has increased since 2020 because consumers cooked at home more often during and after the Covid-19 pandemic. The Ukraine War, which created a global shortage of sunflower oil, has pushed olive oil demand even higher.
As a result of exceedingly poor weather conditions, the recent October to February olive harvest produced about 630,000 metric tonnes, down from the usual 1.4 to 1.5 million metric tonnes.
Consumer habits are changing in some quarters. Some have switched to lower-priced vegetable or seed oils. But analysts believe demand for olive oil will remain high at almost any price. With less rainfall, Europe’s drought could lead to higher prices in the 2023/24 harvest season.
On the date of publication, Andy Mukolo did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
