Olive oil prices surge as drought hits harvests

Oil prices have surged so far this year but this time
we’re not talking about the black stuff, but rather the type that
comes from olives.

The price of olive oil is up around a quarter this year to more
than $4,200 a tonne, says the Financial Times.

According to the Daily Telegraph, the cost of a litre
bottle has risen six per cent to £5.16 “in the past six months
alone”. The price was £4.41 in 2009.

While some of this could reflect the increase in import
prices related to the slump in the pound following the vote for
Brexit, it is more a reflection of reduced supply after drought
affected harvests in Southern Europe.

“Italy is terrible, Greece is terrible, and Tunisia is
terrible. Can you imagine if Spain had also been down sharply?”
said Panayotis Karantonis, director of the Greek Association of
OIive Oil Processors and Packers.

Vito Martielli, a grains and oilseeds analyst at
Dutch multinational Rabobank, said: “We have had
bad weather affecting production three years out of the last
five.”

World production is forecast to fall 14 per cent for the
12 months to September, with output from Italy to drop by 50 per
cent, by 20 per cent from Greece and 17 per cent from Tunisia,
according to the International Olive Council.

“Production in Spain, known in the industry as the Saudi
Arabia of olive oil because of the size of its output, [is]
predicted to decline 7 per cent,” says the FT.