A multi-year olive oil shortage in Spain, which accounts for about 40% of global production, pushed prices to record highs earlier this year amid sticky food inflation worldwide. Now, there is some good news, as Bloomberg reports olive oil production in the southern Europen country is set to rise, possibly alleviating the severe supply crunch. 

New data from the Spanish Ministry of Agriculture, Fishing and Food forecasts that the world’s top olive oil producer will record about 1.26 million tons this year, or about a 48% increase versus 2023. This would ensure Spain’s olive oil production returns to the long-term average. 

The skyrocketing price of olive oil, sometimes called “liquid gold,” has been primarily due to two years of poor harvests across the Mediterranean because of adverse weather conditions, such as widespread drought. This pushed prices to record highs of nearly 9,000 euros a ton at the start of 2024.

Spot prices for Spanish Olive Oil Extra Virgin peaked at 8,835 euros a ton in late January and have since tumbled into a bear market, sliding to around 7,000 euros a ton by fall.  

Here’s more from Bloomberg:

Signs of a better harvest have seen the commodity decline by more than a fifth from highs above €9,000 a ton. Shoppers will probably only benefit from lower prices later on, as supply contracts are usually negotiated months in advance. Weather conditions in the coming weeks could also impact on production as harvesting of the crop has only just begun, the Spanish government said.

The surge in olive oil prices due to adverse weather conditions has also affected other food crops, including cocoa, oranges, and other softs, as well as beef.

Last Friday, the Food and Agriculture Organization of the United Nations’ Food Price Index, which tracks the international prices of a basket of globally traded food, jumped the most in 18 months in September. 

This reacceleration in global food prices has ignited fears supermarket prices are set to surge again. 

Readers have been well informed about the rising risks of global food inflation re-accelerating. We said in June…

About a year ago, Sara Menker, founder and CEO of Gro Intelligence, warned in a Bloomberg interview that the current global food crisis is ‘much worse than 2008’. 

In the US, the Harris-Walz campaign’s only proposed solution to tackle rampant food inflation has been ‘communist price controls’… 

Food inflation is very sticky. Maybe it’s time to ditch de-growth ‘climate change’ policies to bring inflation lower.