Olive oil prices to rise due to heatwave

The price of olive oil is set to increase by 25 percent within months, one of the largest supermarket suppliers has warned, as the heatwave in Italy and Spain hammers production.

Acesur, which supplies the UK’s biggest supermarkets, told the BBC the increased prices would feed through into prices in shops in the next three to four months when companies renew their contracts.

The company’s export manager, Miguel Colmenero, said customers could see prices rise by 20-25 percent, saying that the heatwave across Europe had a “drastic” effect on Spain’s olive oil production. Acesur sells 20,000 tonnes of olive oil in the UK every year.

Extra virgin olive oil was already 7.3pc more expensive in July compared to June, according to the Mintec benchmark prices, but is set to go even higher as supermarket contracts come up for renewal.

Spain is responsible for around half of the global production of olive oil, making 1.4 million tonnes a year. Acesur said the current forecasts were for this to have dropped to 1 million this year.

Other olive oil producing countries like Italy and Portugal are also badly affected as they  have been experiencing extreme temperatures and a lack of rain in recent weeks

Acesur sells around 20,000 tonnes a year in the UK and packs own-label brands for Sainsbury’s, Tesco, Waitrose, Morrisons and Asda. The supermarkets also stock its La Espanola brand, which is the third biggest in the UK. 

The company’s export manager, Miguel Colmenero, added that the dry weather could also impact next season’s crop, if olive trees could not grow new branches due to lack of water.

Most of the olives in its products are grown in Andalucia, southern Spain, which has had very little rainfall in recent weeks. It is having an impact on global prices as well. In July the Mintec benchmark price for extra virgin olive oil rose to its highest level so far this year, up by 7.3 percent on the previous month and 14.2 percent on the previous year, according to the market research group.

The report comes as the war in Ukraine slashed the global supply of sunflower oil, given the country was the world’s largest exporter of the oil, pushing prices of all oils higher.

A rise in the price of olive oil is set to pile further pressure on already-squeezed households, who are facing the biggest income squeeze on record.