Market Insight-Olive Oil
Chex Finer Foods
5/23/23
To our valued retailers,
We wanted to give you a further update to our last communication about the critical olive oil situation in Europe, which is being driven by drought conditions and elevated temperatures. We continue to follow the challenging conditions diligently and are in close contact with our producers and other stakeholders in the industry. The continued scorching heat and flash floods in Southern Europe are further pressuring Extra Virgin Olive oil prices to continue to rise. Global olive oil prices have hit $5,989.8 per metric ton and according to data from the International Monetary Fund, olive oil prices are now at a 26-year high.
Source: cnbc.com
Ongoing climate disasters with extended high temps and severe droughts have severely impacted the olive yields in the 2021 and 2022 harvests. There is deep concern that if the drought continues it will be a 3 rd consecutive poor harvest, which will exacerbate the current situation and potentially impact future tree yields due to failing trees . The recent spike in prices is being driven by an early heat wave in Spain, with an average of 101.84 F. This coincided with the period when the trees usually blossom and subsequently there is deep concern about the impact on their ability to bear fruit this fall.
Olive oil production in Spain alone (the majority contributor of Olive oil to the global market) dropped a staggering 55% last year . Even through some areas like Italy and Tunisia had decent harvests, they are not enough to offset Spain’s shortfall. “Drastically lower yields in the country, usually responsible for almost half of global production and annual exports of nearly €3 billion, have resulted in rising prices across the olive oil sector supply chain. Due to its immense size, pric es in Spain largely dictate prices in other international markets.” (Source: oliveoiltimes.com) Because of these factors, olive oil prices have hit record highs and through the prolonged drought, the costs are anticipated to stay elevated for the near future . It is likely that prices and promotional support will continue to be pressured. We will continue to work closely with our suppliers to navigate these unprecedented times and together we will get through the best we can.
We will monitor the situation and stay on top of these challenging times and will continue to keep you informed as we learn more information.
Nick Simmons Senior Category & Brand Development Manager
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