Europe's Heat Wave Pushes Olive Oil Prices Back to the Top

Europe's scorching heatwave is tightening olive oil supply and reigniting price gains.

Climate Shock: Production Losses and Price Pressure

■24 m tonnes projected 2025‑26 Spanish cereal harvest, revised down to 18.5 m tonnes

■7 % expected decline in sunflower output and 6 % drop in corn forecasts

■Extra‑virgin olive oil price holding above £7 per litre, climbing again in recent months

■French salad and root‑vegetable yields could fall by up to 50 %

Early Harvest and Quality Risks

Olive trees are shedding fruit under drought stress; an early harvest threatens both yield and quality. Walter Zanre, UK head of Filippo Berio, warns “reduced yields and premature picking could push next year’s supply‑demand balance into a critical zone.”

Ripple Effects Across the Supply Chain

■Fires in Spain and Greece scorch not only olive groves but also high‑value crops like citrus, avocados and almonds

■The UK is increasing vegetable imports from Spain and Germany, inflating logistics costs

■Water scarcity may raise irrigation expenses by 15‑20 %, especially in arid soils, pressuring producers further

Ege Kaan – Wall Street and U.S. Macro Strategy Lead: “Olive oil accounts for roughly 0.2 % of global GDP. Production squeezes and price spikes will feed food‑inflation pressures and compress margins for European food firms. In the short term, volatility indices akin to VIX are likely to rise as market participants price climate risk, while institutional investors may tilt toward agricultural commodity funds. Over the longer horizon, demand for climate‑resilient oil alternatives (e.g., sunflower, canola) is set to increase.”