La European Commission has published its latest report on agricultural prospects in the Union, in which it considers it likely that Community olive oil production will reach approximately 1,5 million tonnes (+9% year-on-year). Furthermore, it highlights that due to low initial stocks, availability in the EU could be the lowest in recent years (-33% below the five-year average). In this context, prices are expected to remain at high levels in the 2023/24 marketing year.
The Community Executive report – as reported Mercacei – highlights that EU olive oil production in the 2023/24 campaign will be affected by negative meteorological phenomena occurring throughout the crop cycle. In particular Spain, Portugal and Greece they experienced an extremely dry and hot spring, while Italy benefited from the rains.
According to Brussels, rainy episodes shortly before and during the summer probably did not improve the situation in Spain and Portugal, as new heat waves subsequently occurred. Furthermore, he believes that this climate trend will favor the development of olive fly. Accordingly, it is expected that Spain and Portugal will fail to reach their full production potential, with a recovery that will probably be only about 20% compared to last year. For its part, it expects Greece to see a drop in production of around 20%, while Italian production is expected to grow.
Furthermore, Brussels believes that expected stable imports could support EU supplies, especially thanks to a harvest slightly higher in Tunisia.
On the other hand, he emphasizes that prices and lower availability will continue to be the main factors reducing demand both at an international and community level. This, in his opinion, could cause a new decline in EU exports (up to 540.000 tonnes, -10%) and EU consumption (-6%), which had already fallen significantly in 2022/23.
The European Commission report also highlights that due to lower EU olive oil production in the 2022/23 campaign (around -40% year-on-year) and expectations of a lower than average harvest in the 2023/24 campaign , Producer prices are reaching historic highs across all categories and across all Member States. For example, at the end of August in Jaén, the EU's largest production region, prices were around 820 euros/100 kg. for extra virgin olive oil 760 euros/100 kg. for the virgin category and at 730 euros/100 kg. for the clear. “In all cases, these prices are almost three times higher than the five-year average and the highest ever recorded,” the community body underlined.
Brussels believes it is likely that these prices will negatively affect EU consumption and exports in the coming months. Indeed, it highlights that some drops have already been observed: between April and June 2023, EU monthly exports fell by around 40% compared to the same months in 2022, supporting an overall decline between October and June of around 23%.
This trend, in the opinion of the European Commission, leads to a decrease in EU exports in the 2022/23 campaign, which could be around 600.000 tonnes (220.000 tonnes less than in the 2021/22 campaign). At the same time, EU imports may be slightly lower than estimated before the summer (160.000 t).
