“If there is no decrease in temperature or rains in the coming weeks, this year’s olive harvest could be significantly lower than previous ones,” Luis Planas told Bloomberg News. “The olive industry is worried about oil production”. Spain accounts for almost half of the world’s olive oil production. The setback, along with the ongoing disruption of sunflower oil supplies from Ukraine, meant vegetable oil prices were likely to remain high, Planas said. Refined olive oil prices in southern Spain’s Jaen, the Spanish benchmark, rose 8.3% in June from the previous crop year to €327 (£274) per 100kg, according to the International Olive Council. In Bari in southern Italy, extra virgin olive oil cost €419.7 per 100kg, on average. Kyle Holland, an analyst at market research group Mintec, said his market sources suggested there could be 25 to 30 percent year-on-year declines in Spanish olive oil production. “There are also big concerns in the market about the quality of the upcoming crop and what percentage of the crop will make extra virgin/virgin grades and how much will be classified as lampade [not fit for human consumption],” he said. “As Spain accounts for the lion’s share of global olive oil production, these reductions would lead to a significant boost in global availability. Looking ahead, market participants expect prices to continue to rise unless the weather improves and gives crops a break.” Olive oil supplies are under threat as northern Italy suffers its worst drought in 70 years. Market sources say Italian olive oil production could be 20-30% lower than last year. The drought is also expected to lead to lower crops of apricots, peaches and pears. Hot weather in large parts of Europe also threatens to disrupt grain production at a time when global food prices are nearing record highs as a result of Russia’s invasion of Ukraine, which has sent the price of wheat and other grains soaring . Planas estimates that Spain’s total grain production, including corn, wheat and barley, could fall by 13% this year to 17.5 million tonnes due to high temperatures and scarce rainfall. Ukraine and Russia struck a UN-backed deal in late July to allow millions of tonnes of grain to be exported from blockaded Black Sea ports, which could help lower prices and avert the threat of a devastating global food crisis. crisis. Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk The aim of the agreement is to ensure the passage of grain and essential goods such as sunflower oil through three Ukrainian ports, including Odesa. Officials hope that if Russia sticks to the deal, pre-war levels of exports from the three Ukrainian ports – 5 million tonnes a month – could be reached within weeks. Planas said Spain had received only a few shipments of Ukrainian grain using alternative routes since the invasion began six months ago. On Monday, Ukraine made its first grain shipment since Russia invaded the country in late February.
