Healthy demand for olive oil

Extra-virgin olive oil is showing extra high price increases which may cause pause this summer when consumers drizzle olive oil over salads. Is olive oil liquid gold? Vito Martielli, analist at Rabobank Food & Agribusiness Research, explains why olive oil trading prices have increased last year.

‘Olive oil is a niche vegetable oil which has experienced a strong demand growth due to its positive effect on human health’, says Martielli. Italy is the world’s largest olive oil consumer (more than 500,000 tonnes) and Greece has the highest yearly olive oil consumption per person: 15 kgs.

Supply shock

‘Recent olive oil price increases have not been because of healthy demand, but from supply shock’, explains Martielli. In the main producing countries of Spain and Italy, production has strongly declined because of drought. The other two large olive oil producers, Greece and Tunisia, had good yield and production, but not enough to compensate for the damages to crops in Spain and Italy. Currently international trading prices are 3,500 euro per tonne, which is 75% higher than in May 2014.

Off-year

Outlook and high prices don’t have a similar impact on all producing countries. Olive trees have on-years in which the yield is very high and off-years in which production is lower. Martielli: ‘For the 2015/16 olive crop, Greece is moving into an off-year. The outlook and price increase are not going to have a major impact on the Greek economy.’ In the last five years, average olive oil production in Greece accounted for USD 850 million of which export is around 40 percent.

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