The harvesting season approaches and the European Commission predicts an overall world production of 3,865,000 tons. A high yield is expected in Spain, the world’s largest olive oil producing nation. It produced 1.2 million tons of olive oil in 2019/20 and is expected to hit 1.5 to 1.6 million tons in 2020/21(about half of the world output).
On the other hand, a dry spring in some of Italy’s major producing regions and summer heatwaves in Greece will result in smaller harvests. Last crop year, the two countries harvested 330,000 tons and 275,000 tons, respectively. Portugal is also anticipating a slightly smaller harvest in 2020 than it had in 2019 when 140,000 tons were produced. In Tunisia, after a record-braking harvest, producers are expecting an off-year with a much more modest yield in 2010/21 (between 130,000 and 140,000 tons, down from the 400,000 tons recorded last year).
Overall, the world production should be around 5% scarcer than the previous year, while the commission estimates that overall olive oil consumption will increase by 6% percent in the 2020/21 crop year. The pandemics has changed the households’ eating behaviours as people are more concerned about their health and immunity. It is also believed that olive oil stocks in the trading bloc will fall to less than 600.000 tons in October after a considerable volume of sales in September.
The juncture between the two crops is proving difficult due to the lack of good quality stocks, which is, along with a scarcity of rain in Spain in this period, the main reason why prices have taken a 10% increase since September. Levels should remain such until December, while for the price trend at the beginning of 2021, we’ll have to wait a couple of months and see the evolution of the harvest and transactions. What is sure is that Spain, producing about half of the total world output this season will have the monopoly and will dictate the market trend.