There is growing anticipation that olive oil prices will decline due to a good harvest in Spain. Photo by AP Yonhap News

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With Spain, the world's largest olive producer, enjoying a bumper crop, expectations are rising that olive oil prices will fall to less than half their current level starting January next year. Last year, olive oil production plummeted due to droughts and wildfires in Southern Europe, causing prices to skyrocket this year. While the timing of price stabilization may vary by country, the prevailing outlook is that global olive oil prices will drop compared to this year once winter passes.

Deoleo, Spain's largest olive oil producer, recently told Euronews that it expects olive oil prices to drop to less than half their current level between November this year and January next year. This optimism is due to a significant increase in olive harvests not only in Spain but also in other Southern European countries such as Greece and Turkiye, raising hopes for a recovery in supply.

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Olive oil prices have shown extreme volatility over the past five years due to COVID-19 and climate change-induced weather anomalies. The international monthly average price of olive oil was traded at $3,000?4,000 per ton (about 4.19?5.59 million KRW) before the outbreak of COVID-19 in 2019, but plunged to $1,313.41 in December 2020. After that, poor harvests due to abnormal weather and increased demand caused prices to surge, surpassing the $5,000 mark in January last year at $5,893.3, and breaking through $9,000 in September at $9,364.94.

The price rally continued this year, reaching an all-time high of $10,281.37 in January. Severe droughts and wildfires in Spain and Greece drastically reduced olive production, and the outbreak of the war in Ukraine sharply cut sunflower oil supplies from Ukraine, causing overall edible oil prices to soar.

Olive oil displayed on the shelf. Photo by AP Yonhap News

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However, the situation has recently started to change. According to CNBC, Spain, which accounts for 40% of global olive production, is already seeing a downward trend in prices. According to agricultural market research firm Expana, the price of extra virgin olive oil from Andalusia, Spain, has dropped 19% from last month to 6 euros (about 8,843 KRW) per kilogram. Compared to January, when prices hit an all-time high of 9.2 euros, this is a decrease of more than 35%.

Kyle Holland, senior edible oils analyst at Expana, said, "Most in the industry expect olive oil prices to weaken," adding, "In Spain, the 2024?2025 season's olive oil production is expected to reach 1.3 million tons, nearly double the 670,000?680,000 tons produced in the 2022?2023 season."

However, the extent and timing of the olive oil price decline may vary depending on the situation in each country.

A Deoleo official stated, "Due to the soaring olive oil prices over the past two years, consumption has noticeably decreased, while production has increased, so prices are expected to fall in most countries,"

"The extent and speed of the price decline may vary depending on each country's inventory levels, the proportion of olive oil in total edible oils, and consumption."

Photo by Getty Images Bank