The olive oil market, particularly at source, is currently facing a complex situation marked by multiple interdependent factors affecting prices and the dynamics of supply and demand.
At the end of October, initial estimates of production in the Andalusian Community (Spain) set the record for the current campaign at around 1,021,000 tonnes, a figure in line with forecasts by the cooperative sector and other market players.
However, while the market initially reacted moderately due to the lack of sustained rainfall and insufficient stocks from the previous harvest, after several weeks, from mid-November onwards, the price of olive oil at source fell sharply due to the liquidation pressure exerted by farmers on industrial mills or the early and abundant production of super-intensive olive groves in our Portuguese neighbors.
Fear of lower prices led to massive supply, which in turn led buyers to delay their purchases, exacerbating the fall in the price of oil on the market. In addition, other factors such as low yields (15-17%) of harvested olives intensified this tension.
Internationally, the competitiveness of Spanish olive oil is strengthened, but also challenged, by harvests in other producing countries such as Tunisia, Turkey and Greece, which together will bring almost a million tonnes to the world market. This additional supply promises a more resilient international marketing scenario, although it adds pressure on export prices and on the profitability of the Spanish sector.
Against this backdrop, the sector faces the challenge of adapting to changing conditions to ensure a stable and competitive olive oil market over the coming months.
Factors influencing olive oil price fluctuations
As mentioned above, olive oil price volatility responds to a combination of complex factors affecting supply and demand at both global and regional levels. To understand these variations, analytical models such as linear regression provide a first predictive basis, although they need to be adjusted periodically due to the influence of external and fluctuating variables.
The main factors influencing olive oil prices are as follows:
Inflation and energy costs:
First of all, inflation and energy costs are key factors in the formation of olive oil prices. Inflation drives up operating costs throughout the supply chain, from production to final distribution. Thus, increases in agricultural inputs, packaging materials and transport services have a direct impact on the price of the final product.
On the other hand, energy costs, particularly those derived from oil and electricity, particularly affect the energy-intensive olive oil production and milling processes. Thus, in a context of high energy prices, oil mills and distribution companies are forced to raise their prices to compensate for the increase in their operating costs.
Supply and demand
Secondly, supply and demand for olive oil are other determining factors in setting olive oil prices, since this market is characterized by great sensitivity to variations in annual production and changes in world consumption.
On the one hand, olive oil supply is closely linked to climatic factors, such as rainfall, temperatures and drought cycles, which directly affect crop yields and quality. In years of low rainfall or extreme climatic events, production declines, reducing available supply and driving up prices. Seasonal phenomena and heat waves, such as the recent “veranillo de San Miguel”, can also affect the quality of olives, which in turn affects the quality of the oils obtained, especially extra virgin oils.
Demand, meanwhile, varies both nationally and internationally. Globally, olive oil is highly appreciated in markets such as Europe, North America and Asia, where consumption is influenced by health, wellness and culinary trends. However, demand is also subject to competition from other oils, such as sunflower oil and rapeseed oil, which tend to be less expensive.
At global level, Spain’s role as leading producer and exporter is crucial, as any change in its supply can affect world prices. In this sense, high production levels in other producing countries, such as Tunisia or Turkey, also influence the balance of supply and can help to cushion international price rises.
Trade policies and currency fluctuations:
On the other hand, trade policies and currency fluctuations are crucial factors in the price dynamics and competitiveness of olive oil on the international market.
Trade policies include both tariffs and taxes applied by importing countries, and trade agreements that facilitate or restrict olive oil’s access to certain markets. For example, the tariff policies of strategic markets such as the United States can directly affect export volumes for Spain and other producing countries, thus modifying global demand. For example, a notable threat has been posed by current President Donald Trump, who has considered imposing additional arancels on olive oil, inevitably generating uncertainty in the market. This measure would not only have affected Spanish exports, but also those of other European Union countries.
In addition, the European Union plays a key role in regulating and supporting the olive sector through subsidies and promotional programs designed to increase the competitiveness of European olive oil abroad. Trade agreements between the EU and third countries have opened up new market opportunities, while generating greater competition with other major producers such as Tunisia and Turkey. For example, the recently ratified Mercosur agreement will enable EU olive oil to benefit from a significant reduction in customs duties, of the order of 37%, on South American markets, thus strengthening the competitiveness of European producers in this region. This evolution of trade policies may generate uncertainty and affect pricing strategy, as well as the balance of supply and demand on the world market.
On the other hand, currency fluctuations, particularly between the euro and the dollar, have a direct influence on olive oil export prices and, consequently, on its demand on international markets. This relationship is particularly important for Spain, the world’s leading olive oil exporter, which depends on its ability to remain price-competitive on the world market. At present, the strengthening of the dollar against the euro means that olive oil is much more competitive internationally, which favors Spanish exports to dollar-denominated markets.
Thus, trade policies and exchange rate fluctuations can lead to significant variations in olive oil prices, forcing producers and distributors to adapt their pricing and distribution strategies to maintain their position on international markets.
Quality of annual production:
Last but not least, the quality of annual olive oil production is a key factor in determining the value and price of the product on local and international markets. This quality depends on several factors, the most important of which are climatic.
Conditions such as the amount and distribution of rainfall, temperatures and extreme events such as frost or heat waves have a direct impact on the ripening and condition of the olives. When conditions are optimal, high quality fruit is obtained, enabling the production of extra-virgin oils, whose demand and market value are higher. On the contrary, years of drought or poor weather conditions generally result in production with less desirable organoleptic characteristics, generating lower quality oils, such as lampante oils, which need to be refined and therefore command a lower price.
The milling and storage process also influences the final quality of the oil. Mills must maintain controlled temperatures and conditions to avoid oxidation and loss of flavor and nutrients in the oil. During production seasons when mills encounter difficulties, such as high temperatures or crushing failures, the percentage of superior quality oils may be reduced, limiting the supply of categories such as extra virgin oil.
What’s more, the quality of each season has an impact on demand from high-end markets and on exports to countries that regard olive oil quality as a mark of high gastronomy and health. In this sense, higher-quality oils can access market segments willing to pay a premium price, while lower-quality oils tend to be competitive in low-price markets and in categories where they compete with other vegetable oils.
Thus, in such a multifactorial context, price projections are periodically adjusted to reduce the margin of error in the estimates. In the following, we examine olive oil price trends in detail:
Olive oil price trends
The evolution of olive oil prices in recent years has been marked by a steady increase, mainly due to variations in climatic conditions and production costs, particularly energy costs.
Below, Aceites de las Heras presents the evolution of olive oil prices from 2021 to today:
- 2021: The average price remained between €4 and €5/kg. This period was characterized by favorable production, thanks to optimal weather conditions that favored product quality and quantity. The trend over the year was relatively stable, with slight increases towards the end of the year in response to growing demand and interest from international markets.
- 2022: In this year, the average price of olive oil rose to €6-7/kg. The main cause of this increase was the widespread drought in the main production areas, which limited production and reduced available supply. In this context of reduced availability, prices began to rise more rapidly, also driven by firm demand outstripping supply.
- 2023: The upward trend continued, with an average price of between €8 and €9/kg. Poor weather conditions persisted, affecting both the quantity and quality of olive oil available. Added to this are increases in energy costs, which impact the entire supply chain, from mill production to transport. These factors have resulted in steadily rising prices, taking the product to one of its highest levels in recent years.
- 2024: For the current year, the average price is in the €9-11/kg range, confirming the upward trend. Weather conditions have been erratic, with high temperatures and prolonged drought in the early months, followed by heavy rain and lower temperatures in late summer. These changes had an impact on the ripening and quality of the olives, once again reducing the availability of high-quality extra virgin olive oil and putting further pressure on prices.
These trends reflect, among other things, the sensitivity of the olive oil market to external factors such as weather conditions, production costs and available supply. As these factors remain uncertain, price volatility is set to continue in the short and medium term, affecting both producers and consumers, and the product’s competitiveness on world markets.
What is the price of olive oil in Spain today?
According to official country data and IOC Executive Secretariat estimates, world production for the 2024/25 season could reach 3,375,500 tonnes, an increase of 32% on the previous year, with imports and exports expected to exceed 1.2 million tonnes.
For their part, all EU producer countries are forecasting production of 1,973,000 tonnes, an increase of 29%. The other IOOC member countries are expected to produce a total of 1,220,000 tonnes, 40% more than the previous season.
At regional level, Andalusia remains the main producer, with estimated output of 1,021,000 tonnes, or 81% of Spain’s total. This 77% growth in Andalusia compared with last season is linked to favorable spring weather conditions, which favored flowering and fruit setting. On the other hand, Castilla-La Mancha, the second largest producing region, also recorded a significant increase, with 29% more production than in the 2023-2024 season.
Against this backdrop, operators in the sector need to adopt a cautious approach and closely monitor market conditions, climatic changes and technological innovations in order to adapt their buying and selling strategies and take advantage of opportunities in this environment of high prices and variable demand.
In summary, the olive oil market in 2024 presents a complex and challenging environment, marked by multiple interdependent factors affecting both price and availability. Although current projections point to increased production this season in Spain – particularly in key regions such as Andalusia – volatile weather conditions and high energy costs continue to exert upward pressure on prices at source. This situation represents both a challenge and an opportunity for operators in the sector, who will have to adapt to constant variations in supply and demand, as well as to the effects of international competition.
In the short to medium term, olive oil price volatility is set to continue, influenced by highly sensitive factors such as weather conditions, production costs and global consumption dynamics. Faced with this scenario, olive oil producers and distributors in Spain will need to adopt a cautious, strategic vision, paying close attention to technological innovations, changes in demand and trade policies, in order to guarantee stability and competitiveness in a market that increasingly demands adaptation and flexibility.
