Crop damage in Italy and a weak harvest from Spain mean global production in the season through September 2015 will be the smallest in 15 years, the International Olive Council said Dec. 2. At a time when global food costs are dropping, olive-oil prices are surging for Italian consumers mired in a three-year recession, as well as for major importers including the U.S., where consumption has tripled in the past two decades.
“People will pay more,” said Michael Bradley, president of Oakland, California-based Veronica Foods Co., which imports more than 1 million gallons a year.
Intermediate-quality virgin olive oil from Spain, an industry benchmark, may reach 3.20 euros ($3.96) a kilogram in the next two to three months, Bradley said, an increase of about 65 percent from this week.
Olives trees, which can produce fruit for hundreds of years, are harvested in Italy from September through January. The average household in the country uses about 34 liters of the oil a year, or 9 gallons, according to data compiled by Bloomberg from Rabobank and the Organization for Economic Cooperation & Development.
Prices for Italian top-grade extra virgin oil touched a record in November and are up 46 percent at the mill in the past two months to 6,308 euros a metric ton. Spanish intermediate-quality virgin oil has risen 61 percent from a low in May to 2,764 euros a ton.
“Some consumers will ration olive oil and switch to others, in particular, sunflower oil,” according to Vito Martielli, an oilseed analyst at Rabobank in Utrecht, Netherlands.
Prices for olive oil are surging at a time when global food costs are the lowest in four years, including cooking oils made from crops. Global harvests of soybeans, oil palm, rapeseed and sunflower seeds have touched all-time highs in recent seasons, boosting output of vegetable oils to records this year, U.S. Department of Agriculture data show. Soybean-oil futures on the Chicago Board of Trade have tumbled 21 percent from a year earlier, touching a five-year low of 31.17 cents a pound on Dec. 2.Prices for Italian top-grade EVOO touched a record in November,