Supply Rebound Pushes Prices Down as Uncertainty Clouds Outlook

Key Takeaways

• EU olive oil output jumps 37% to 2.1 million tonnes.
• Spain leads rebound, production up 66% to 1.4 million tonnes.
• Extra‑virgin price falls from €8.3 ($9.1) to €3.2 ($3.5) per litre.
• Exports projected +25% to 760k tonnes; imports +15% from Tunisia.
• Heat stress warnings could curb 2025/26 harvest, reviving price risk.

Pulse Analysis

The 2024/25 olive‑oil season marked a dramatic turnaround for Europe’s market fundamentals. After two years of record‑low harvests that drove prices to historic highs, a surge in output—especially from Spain’s 1.4 million‑tonne crop—has flooded the market, halving the per‑litre price and pulling it beneath the five‑year norm. This supply boost coincides with persistent inflationary pressures on energy, transport and fertilizer, keeping production costs roughly 30% above 2020 levels and squeezing margins for growers across the continent.

Consumer demand is responding to the price correction, with consumption expected to edge back toward the five‑year average of 1.4 million tonnes. The price advantage also fuels a 25% jump in exports, targeting the United States, Canada, Australia and China, while imports climb 15% as Tunisian oil—often blended or re‑branded—fills residual gaps. These dynamics enhance the competitiveness of European olive oil but also introduce complexity, as lower‑priced imports exert downward pressure that the EU outlook does not fully capture.

Looking ahead, the sector’s resilience hinges on climate resilience and orchard modernization. Early heat‑stress reports from key regions signal a potential shortfall in the 2025/26 harvest, which could reverse the current price decline and reignite food‑inflation concerns that already sit above general inflation. Long‑term growth will likely depend more on yield improvements and technology adoption than on expanding cultivated land, underscoring the need for investment in sustainable farming practices to mitigate climate risk and sustain profitability.