A European Commission report predicts a three-percent increase in olive oil production in the E.U. due to reduced pest activity and some countries entering an on-year.

A drop in olive oil production is anticipated in Spain for the upcoming 2019/20 crop year, while a record yield is projected in Portugal.

These were among the predictions in the European Commission’s (EC) latest tri-annual short-term outlook report released last week.

In the report, the EC estimates that European Union (E.U.) member states will produce 2.1 million tons of olive oil in 2019, which is three percent higher than the average for the past five years.

The EC attributed this increase in part to a reduced impact from olive fruit flies and other pests. They are also expecting the quality of olive oil to be higher due to favorable weather conditions in the region during harvest time.

Following Spain’s bumper harvest last year, a five-percent drop in production in comparison to their average over the past five years is predicted, with an anticipated yield of 1.25 million tons.

On the other hand, Portugal expects a yield of roughly 140,000 tons, an increase of 50 percent compared to its annual average.

Tunisia and Italy are forecast to produce around 350,000 tons — well above their average yields; and Greece is anticipated to have an output of 300,000 tons representing an increase of more than 60 percent compared with last year and 11 percent above their annual average.

This comes as good news for Italy and Greece. In the EC’s April report, last year’s poor harvests were attributed to abnormally harsh weather conditions in some parts of Europe late in the season.

The EC furthermore predicted a drop in exports from the E.U. to the U.S. for the coming season. The current record-high level of exports to the U.S. has been due to stockpiling in anticipation of the imposition of tariffs on American imports of European olive oil, according to the report.

The forecast for exports from the E.U. remained optimistic though, with an increase of seven percent to 610,000 tons due to the expansion of Asian markets. It was noted that from October last year through July, record shipments were recorded to Japan, China and Brazil.

Besides exports to E.U. countries, shipments elsewhere increased by 65 percent over the past decade and these contributed to 25 percent of the E.U.’s growth in exports.

The report estimated a decrease in olive oil imports to the E.U. due to abundant domestic supply, which will lower the demand for imports to an estimated 100,000 tons. It is also predicted that domestic consumption in the E.U. could improve due to favorable pricing.

According to the report, consumers in the major olive oil-producing countries in the E.U. are more price-sensitive than those in the rest of the trading bloc.

As a result, consumption in the E.U.’s major olive oil-producing countries is predicted to grow faster — by six percent — than in the rest of the E.U., where growth of four percent is anticipated.

Source: OliveOilTimes

Read and download the report for EU agricultural markets released by the European Commission here.