Despacio, penny by penny, but steady since January 8. Olive oil prices have been easing in the origin markets—the payments received by farmers—over the past several weeks. That initial step downward in the food chain hints that, within a few months, shoppers could begin to see some relief at the shelf. Yet the reductions are modest and unlikely to completely offset the nearly 70% surge olive oil experienced in supermarkets during 2023. Industry expectations suggest prices will stay higher for a while, though some easing could occur.
Since the start of the year up to this Tuesday, when quotes were last updated, extra virgin olive oil has fallen by 6.4% at the Tortosa exchange, a key reference market for this product in Spain. Virgin olive oil (non-extra) has declined about 8%, and since January 15, refined olive oil prices have dropped by 16%. Olive oil pomace, which peaked earlier this year on February 12, has decreased by 4.5% since then. Overall, olive oil prices are about 8.7% cheaper than at the start of 2024.
“All of this has happened thanks to the rains”, summarizes Francesc Minguell, chief executive of the Tortosa Chamber of Commerce, the body that oversees the origin-price exchange in the Baix Ebre region. “The olive market, like other farm goods, runs on forecasts for the future; prices are set based on the harvest expected in the coming months”, Minguell notes. With recent weeks of rainfall, especially in Andalusia, the main olive producer in Spain and Europe, the forecast points to a harvest that should be far more abundant than the past two seasons, he adds.
One-Year Contracts
Minguell highlights a second factor driving the current trend. “Prices had risen so high that many deals never closed, as producers and distributors preferred alternative oils rather than paying the steep olive-oil prices”, he explains. He adds that Tortosa has maintained a relatively firm stance on quotes to shield farmers from sharper declines. The exchange had even forecast that extra-virgin olive oil could reach 11 euros per liter at some point. This week it stood at 8.70 euros, after peaking at 9.30 euros on January 8 of this year.
“How long will the pass-through to consumers take?” he asks. The answer is uncertain because large-scale retailers typically set prices a year in advance. That means the prices paid now in shops were decided at the start of this season and are likely to stay in place for several months. Still, it is expected that after the summer, when a new olive harvest begins, prices will be reviewed again, most probably downward.
Also the Prices and Markets Observatory of the Andalusian Regional Government, the body responsible for setting olive oil prices, has reported several weeks of declines. The rains arrived at a nearly providential moment, just as trees were breaking winter dormancy and restarting their productive cycle. As May approaches and the olive fruit begins to mature, a more precise estimate of the 2024-2025 harvest will emerge. That will make it easier to gauge the balance between supply and demand and to fine-tune price stabilization.