Heatwave and drought in Europe expected to drive olive oil prices higher

Extreme heat and drought across Europe have damaged olive groves, raising expectations of higher olive oil prices, The Guardian reports. Olive oil producers say they expect another price surge later this year as weather-related losses reduce production.

This summer, olive groves were hit by wildfires in Greece, Italy and Portugal. Even orchards that escaped direct fire damage were affected by wind-blown ash and poor air quality. Extreme heat has also increased pest and disease pressure, intensified severe storms and reduced olive fruit size, further weighing on yields.

Although global olive oil prices had gradually eased after the sharp rally two years ago—driven by strong demand, hot and dry weather, and widespread pest and disease outbreaks—the average price of a one-liter bottle of extra virgin olive oil in UK stores remains above £7 (about UAH 422) and has started rising again in recent months.

Farmers across Europe are warning of lower harvests and higher prices as crops ranging from corn to vegetables suffer from adverse weather. France’s vegetable growers’ association Légumes de France said that thousands of tons of produce worth tens of millions of euros have already been lost, including carrots, garlic and onions.

The heatwave has also affected vineyards in the Champagne, Bordeaux and Burgundy wine regions. Growers expect lower grape yields and are preparing for the earliest harvest on record, with grape picking in Champagne expected to begin on August 15, almost a month earlier than usual.

Spain’s Ministry of Agriculture forecasts the country’s 2026/27 grain harvest at 18.5 mln tons, down from 24 mln tons last season. The estimate was made before the latest wildfires caused additional damage. While Spanish farmers are better adapted to hot and dry conditions through drought-tolerant crop varieties, irrigation and water storage, extreme weather continues to put significant pressure on production.

The European Commission has also lowered its crop forecasts, projecting sunflower production 7% below the previous harvest, grain corn 6% lower, and potato and soybean output 3% below earlier expectations.

According to Spain’s agricultural organization ASAJA, wildfires have damaged orchards, vineyards, farmland and greenhouses, affecting citrus fruits, avocados, almonds, grapes, vegetables and olive groves. Drought and extreme temperatures have also reduced tomato and corn production. The organization noted that while lower domestic output may reduce exports of some products, the main concern is the sharp increase in production costs rather than disruptions to international trade.

Tags: EU, prices, France, olive oil