Greek Olive Oil Saves Global Production and Markets
World olive-oil production is predicted to slump in 2014-15 because of the effects of drought and exhausted trees in Spain and civil war in Syria, lifting prices in coming months, industry researcher Oil World said.
Output of pressed olive oil may fall to 2.55 million metric tons in 2014-15 from a record 3.19 million tons a year earlier, the Hamburg-based researcher wrote in an e-mailed report.
Southern Spain suffered its worst drought in a century in the period from September 2013 through to May 2014, and trees are exhausted from record production in 2013-14, according to Oil World. The country is the world’s biggest producer and exporter of olive oil, used in everything from salads to soap.
The production drop “will require substantial demand rationing, primarily in the European Union but also in other countries, keeping prices well supported in the foreseeable future,” Oil World wrote.
Olive oil futures traded in Jaen, Spain, surged 27 percent in the past 12 months to close at 2,485 euros ($3,102) a ton yesterday.
Olive oil prices in Spain “have upward potential in coming months in view of renewed confirmation of a looming steep decline of Spanish olive oil output in 2014-15,” Oil World said.
Spanish output of first-pressed oil is forecast to fall to 830,000 tons from 1.77 million tons, while production including residue oils obtained from pressed olive pulp is seen falling to 900,000 tons from 1.92 million tons, Oil World said.
Rising production in Greece will partially make up for the drop in Spain, with the volume of pressed oil climbing to 300,000 tons from 158,000 tons. Italy’s olive-oil output is seen little changed at 455,000 tons, from 450,000 tons.
Tunisia’s production of the oil may rise to 260,000 tons from 80,000 tons, which is “good news” for European consumers, according to Oil World. In Syria, output is expected to receive “a major blow” as a result of the civil war as well as drought, dropping to 50,000 tons from 135,000 tons.