Following Expana’s Spanish extra virgin olive oil Benchmark prices hitting an all-time high of over €9.00/kg in January 2024, prices have declined significantly now, sitting at €4.10/kg as of the last assessment. This deep decrease means that extra virgin olive oil prices for Spain are at levels not seen since October 2022, according to Expana data. Expana has learnt that part of this decline stems from the fact that the Spanish Ministry of Agriculture has revised its 2024/25 production forecast to 1.4 million metric tonnes (mt), a substantial increase over volumes produced last season of around 670,000 mt.
Market players have expressed concern to Expana around the sweeping tariffs placed by the US on various nations on April 2, which included what the Trump administration has termed substantial reciprocal tariffs which would have seen EU goods attract a 20% tariff. However, these higher reciprocal tariffs have been delayed for 90 days with all nations apart from China, with Mexico and Canada attracting the lower blanket 10%. Industry insiders commented that the 10% tariff would likely make olive oil prices higher for the US consumer which could lead to a reduction in imports particularly with the global economic situation being particularly volatile. This is particularly significant because the US is one of the largest importers of olive oil, with imports exceeding 350,000 mt in 2023, according to the Foreign Agricultural Service (FAS). A reduction in these imports could have serious repercussions for the global olive oil market, sources commented. Market players have pointed out that such a shift would likely result in a surplus of olive oil within the European Union (EU), as a substantial portion of the supply initially destined for the US market would need to be redirected. This excess supply is likely to be absorbed by domestic EU markets, creating a supply glut, traders said.
The increased supply within the EU could lead to further downward price pressure, compounding the challenges producers already face with fluctuating prices, according to industry insiders. This surplus could intensify competition among EU producers as they try to offload their stock, potentially resulting in lower prices for olive oil across the region, sources commented. The price erosion could have a significant impact on profit margins, especially for producers who are already dealing with rising production costs and stagnant consumption demand, sources added. Expana has also learnt that some players do not believe the 90-day reciprocal tariff reprieve will yield any tangible results and we could “be back to square one”, making the situation exceedingly difficult to navigate.
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Authored by:
Kyle Holland
Expana
[email protected]
