Olive oil prices are forecast to extend gains after drought caused a harvest failure in Spain, the biggest exporter, industry researcher Oil World said.
World output of the oil used in cooking and salad dressings may fall 18 percent to 2.96 million metric tons in the year through September 2013 from 3.6 million tons a year earlier, the Hamburg-based researcher wrote in an e-mailed report today.
Spain had its second-hottest August since 1961, continuing a pattern of hot and dry weather that left April the only month this year that was wetter than usual, according to the country’s Agriculture Ministry. Olive oil prices there jumped 40 percent in the past 10 weeks, Oil World said.
“Severe drought is taking its toll on olive trees as well as other agricultural crops,” Oil World wrote. “Trees had already been stressed by the unusually high production of the three seasons to 2011-12, but the sharp decline in next season’s yields has been enforced by the dryness and heat this year.”
Spanish olive-oil production may slide 37 percent in the year through September 2013 to 1.08 million metric tons from 1.73 million tons in 2011-12, the steepest annual decline ever, according to the researcher.
Domestic prices in Spain for extra-virgin olive oil rose 40 percent from June to about 2,400 euros ($3,073) a ton last week, and could surpass the previous March 2008 high of 2,633 euros to climb to at least 2,800 to 3,000 euros a ton, Oil World said.
“We consider it likely that olive oil prices have further upward potential,” Oil World wrote. “The prospective decline in Spanish production by approximately 650,000 tons can only be partly offset by slightly higher crops in Italy and Greece.”
Italy’s olive-oil production, the world’s second-largest, is seen climbing to 540,000 tons from 518,000 tons, while output in Greece may advance to 355,000 tons from 335,000 tons.
World consumption of olive oil is forecast to stagnate in 2012-13 after climbing for six consecutive years to 3.33 million tons in the past season from 2.9 million tons in 2005-06, according to Oil World.
“It can be expected that consumption of olive oil will be affected by the prospective high prices and the widening of the price premiums relative to sunflower oil and other vegetable oils,” the researcher wrote.
World ending stocks of olive oil are forecast to drop to 747,000 tons, the lowest in three years, from an estimated 1.09 million tons at the end of September this year, Oil World said.