A scarcity of rain in Spain has pushed costs for olive oil to document ranges, with analysts warning {that a} notably dry summer time might result in even decrease crop yields later this yr.

Olive oil costs have surged nearly 60 per cent since June to roughly €5.4 per kilogramme, on the again of a extreme drought in Europe that final yr ruined olive crops throughout the continent.

Spain, the biggest olive oil producer, was hit notably exhausting. The nation’s farmers sometimes produce half of the world’s olive oil, although annual provides have roughly halved to about 780,000 tonnes previously 12 months.

“In 20 years within the trade I’ve by no means seen these costs”, stated Vito Martinelli, grains and oilseeds analyst at Rabobank. Final yr “was a catastrophe” for Spain, and the crop in Italy “was additionally dangerous, together with different international locations within the Mediterranean”. 

2022 marked the driest for Italy since 1800, stated Italian information evaluation agency Centro Studi Divulga.

The extended drought situations in Spain are casting doubt a few manufacturing rebound this yr. Final month was Spain’s second warmest March this century and the second-driest, based on the nation’s meteorological company.

April is about to be the driest on document. The Spanish climate forecaster this week stated “not a single drop” of rain fell throughout greater than half of the nation within the first 17 days of April, with rainfall 23 per cent under regular for the reason that begin of the hydrological yr in October.

Unusually dry climate this summer time might hold costs elevated. “Sporadic rains in Andalucía and Spain usually should not regarded as wherever close to sufficient”, stated Kyle Holland, oilseeds and vegetable oils analyst at Mintec, the commodity information agency.

Olive oil is harvested within the Mediterranean space between October and February, which means that “if it doesn’t rain very quickly, we’re going to have a poor crop once more”, Holland added. “Good high quality olive oil provides are additionally lessening as there isn’t a lot round and consumers naturally need good qualities . . . At this tempo, market gamers are saying we shall be fortunate to see out the remainder of the season with good oils.”

Others are much less vexed. “The rise in costs, particularly in Spain, is sweet information as a result of lastly, maybe, the race to the underside that has broken all European producers and depressed the entire market is over”, stated David Granieri, president of the Nationwide Union of Olive Producers.

“In these situations, we consider that the producers who in recent times have multiplied their efforts to guard biodiversity and produce top quality oils can lastly be valued as they deserve”.

Extra reporting by Emiko Terazono in London