The leading expert for the National Technology Initiative’s FoodNet working group explains that extended drought and record heat in Europe are likely to influence olive harvests across the region. The consequence could be a tighter supply of olive oil on the world market, while demand for alternative oils, particularly sunflower oil, may rise in markets sensitive to price and availability. The broader effect is a reminder that agricultural commodities are tightly linked through climate, trade routes, and regional production cycles, so a disturbance in one crop can ripple across multiple oilseed markets.
Recent projections from the USDA for the 2022-2023 agricultural year indicate a notable dip in global olive oil production, with expectations pointing to an 11 percent decrease to around 2.9 million metric tons. This downward trend aligns with widespread weather challenges and highlights how even strong, long-standing growing regions face volatility when weather patterns deviate from norms. In practical terms, buyers and processors may confront tighter supply lines and higher marginal costs as inventories tighten and new crops come into seasonal balance.
The expert notes that drought does more than stress olives. It affects oilseeds across the board, including maize and sunflower, which means the pressure could extend beyond olives alone. In particular, sunflower reserves controlled by Russia could enter heightened demand as buyers search for reliable substitutes or complementary supplies to diversify their oil portfolios, whether for culinary use, industrial applications, or biofuel considerations. This interconnected dynamic illustrates how geopolitical and climatic factors converge to shape global oilseed markets in real time.
In some traditional olive-growing regions, reports suggest trees are shedding leaves at an accelerated rate, a signal of severe stress that could worsen yields. Such an extreme variable complicates forecasting and raises questions about recovery timelines. Olives are perennial plants with complex, long-lived root systems; unlike annual crops such as peas or wheat, their production capacity cannot be restored quickly. The practical implication for markets is a protracted period of supply constraint, potentially extending for several years as trees recover, regrow, and re-establish productive health under changing climate conditions.
At the start of the current year, authorities introduced a significant policy shift aimed at stabilizing grain, sunflower oil, and food prices. The new framework moves away from a dollar-denominated pricing convention toward ruble-based calculations. This transition is intended to influence tariff structures, import costs, and overall price signals across domestic markets while also affecting international buyers who source these commodities. The adjustment underscores how government policy can interact with climate-driven supply changes to shape market behavior and pricing dynamics in both the short and long term.