“Liquid gold” has never lived up to its name so well. There has been a rapid increase in olive oil prices in the last few months; Just a few months ago, extra virgin olive oil increased by more than 70% on an annual basis, turning the oil into an untouchable item for a long time. several families. A year ago, photos of bottles with alarm rings were even circulating on supermarket shelves. Now the trend is different. Or this is the expectation of the sector, that is, a visible decrease in prices is already beginning to be perceived.

The real question is… How will this decrease occur? When will we feel it in our pocket? And most importantly, is it moving at the same pace at the beginning of the distribution chain as in stores?

Scene change. The “liquid gold” issue has never been more suitable for olive oil in recent months. The effects of the war in Ukraine, and especially the consecutive bad harvests and droughts, negatively affected the industry, causing prices to rise to values ​​​​unimaginable years ago. IMF data is meaningful: if in 2020 a metric ton of olive oil was worth 2,628 dollars, in 2022 it had already increased to 4,469, and at the beginning of this year it was close to 10,100. In March, Facua was still talking about a 73% annual increase in infiltration.

Today, the industry produces different headlines. Good forecasts for the harvest, which could be around 1.26 million tons, which is 48% more than the previous campaign, according to the initial estimates of the Ministry of Agriculture (MAPA), have led the industry to predict a decrease in prices. The industry’s own minister, Luis Planas, acknowledged in October that “the data are positive” and stated that if approved “they would allow markets to return to normal” after two campaigns marked by “extraordinarily low” production levels. . Feelings are also good on the Greek and Tunisian fields.

“There is a downward trend”. One of the last to talk about the new trend is Deoleo, one of the world’s largest olive oil producers and behind brands such as Bertolli and Carbonell. A few days ago, sales manager Miguel Ángel Guzmán admitted to CNBC that “the outlook for the coming months is positive.” “As the new harvest progresses and supply increases, the market is expected to start stabilizing and normalcy will gradually recover,” he adds. According to CNBC, the company’s forecast is for prices to drop by nearly half from record levels.

The manager even goes further and shifts to a short-term time horizon. “As long as weather and harvest conditions remain stable in the coming weeks, the loosening of origin prices is expected to begin between November, December and January,” Guzmán said. “Indicators show that if everything develops normally, especially if the rains continue to favor production, we may see a downward trend in prices throughout 2025.”

I’m looking for spring. The scenario is similar to what Acesur reported in October, which said prices could bottom out in the spring. “If it continues to rain at a reasonable rate we should definitely see prices drop to four or five euros in April and May. “Today we are between seven and eight depending on qualifications,” he said.

“Gradual normalization”. This statement comes from Guzmán, who once again refrained from getting too excited in an interview with CNBC channel and admitted that there are still some uncertainties in the market regarding the 2024-2025 olive harvest. “Although steps have been taken towards recovery, it would not be entirely correct to say that the crisis is over. We continue to experience tension in olive oil prices, especially the prices of the highest quality olive oils such as Extra Virgin.” warns.

The data Deoleo initially discussed in any case leads to a decline in rates. More precisely, he estimates that olive oil prices should be around five euros per liter, far from the maximum of nine or even ten euros reached. “This price could be reasonable in the context of greater production, which would ease market tensions and facilitate the gradual normalization of prices after a period of fluctuations,” he underlines.

So what do the prices say? They are already showing moderation. The Ministry of Agriculture’s latest price bulletin reflects, for example, that Extra Virgin was 681.81 euros per 100 kilos in the week of 28 October to 3 November, almost 3% below the previous week. While it was almost 806 euros a year ago, at the beginning of 2024, in January, it was over 880 euros. MAPA data is interesting because it provides the price practically at the beginning of the chain, when the oil leaves the factory.

Data from Expana shows that the price of extra virgin olive oil in Andalusia stood at $6.33 per kilo at the beginning of the month, representing a 19% decrease on a monthly basis. Compared to 9.2 euros in January, the drop is even larger and close to 35%. There are other sources, such as Oleoestepa, that point to a similar de-escalation trend.

Double tempo descent? This is the question that Facua left floating around a few days ago. In a report published last week, the consumer organization noted two conflicting percentages. According to the data he manages, the origin price of extra virgin olive oil decreased by 13% on an annual basis, while the decrease in supermarkets was quite low and amounted to 2.5%. His conclusions are the result of a comparative study of thirty prices recorded in six major distribution chains.

How did you calculate this? After examining and making calculations, Facua estimated that the price per liter of virgin is currently 12.18 euros. It was 12.5pm in November 2023. After reminding that the VAT on oil was 5% a year ago, the organization says, “There was an annual decrease of 2.5% on a product that almost quadrupled its price compared to 2021.” It is currently at 2%, a temporary value that will rise to 4% by the end of the year.

When we look at the prices on the source, the photo is a little different. Based on MAPA data, Facua calculates that at the beginning of November, a liter of extra virgin product was paid at the source at 6.45 euros. A year ago it was 7.41. Therefore, the price difference paid to farmers was 13% higher than today. The downward trend is also seen in extra virgin olives, which rose from €6.54/l to €5.86 without payment at origin within one year.

Facua is not the only one to point out this apparent double speed of price decline. elDiario.es published an analysis on this topic days ago, citing data from the Poolred system, which takes into account bulk operations. According to the figures in the table, the decrease in price at the source will be even greater than calculated by the consumer organization and will be close to 30%.

looking for reasons. The next question is obvious: Why this obvious double speed? They talk about margin increases in distribution chains from Facua and claim to have detected parallel price changes, citing a recent case where Alcampo, Eroski or Carrefour discounted their bottles after Mercadona did so in early November.

The Coordinator of Farmers and Farmers (COAG) gives elDiario.es another key that, in his opinion, explains the trend: “We believe that an artificial decrease in origin prices is encouraged because there are producers who need liquidity after bad years, and the industry benefits from this.”

Not everyone sees it the same way. There are those in the industry who say that we will have to wait a few more months for prices to bottom out, and that some of the differences between different tiers of the market can be explained by something as simple as distribution.

Distributors and farmers. What matters will be which oil is now on supermarket shelves, the oil that was purchased weeks or months ago and still does not show the price reduction already recorded at the origin, at the beginning of the chain. “Months can pass from the moment distribution operations are carried out until the oil reaches supermarkets,” explains the Dcoop cooperative.

According to him, the decline in prices will occur because values ​​​​do this at the source. “The harvest will be better than in previous years. When we come from 850,000 tons, it will reach 1.3 million tons,” they assured ElDiario.es, and shared a forecast that even improved the forecasts announced by MAPA at that time.

Pictures | Deoleo and Jorge Franganillo (Flickr)

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