The olive oil market has changed significantly in the last year. In September 2012, Spain announced that their 2013 production was predicted to be down by 40% from the year before, due to the harsh storms in the spring that destroyed many of the olive blossoms. Olive oil prices started rising around the globe within days.
According to the International Olive Oil Council, Spain produces about 50% of the worlds olive oil. Economically, this means that they “drive” the world's price-- if the market price for oil in Spain decreases, other countries will follow suit to remain competitive, whether they had a fruitful season or not. On the other hand, if Spain’s price increases, other countries follow along (sometimes at just a slightly lower price, offering a competitive edge), to make as much profit as possible.
Since September 2012, we have seen prices increase 10-50% depending on the date and the grade of the oil. It is clear that prices continue to change on a daily basis in this commodity market. Predictions for the future will be more accurate as we complete the summer and move into fall. So far, Spanish olive crops have not had the same storm damage that occurred in 2012.
If you’re new to the olive oil industry, the increase in price in the last few months may seem sudden and extreme. However, if you look at the chart below, you can see that the olive oil prices in the summer of 2012 were the lowest they’ve been in 10 years. In 2005-6, market prices were much higher than they are today. While it may feel like we’ve been enduring higher prices this spring, it is wise to maintain perspective of where the market has been in the past.
Source: Index Mundi, Commodities and Data Gathering