Spain’s olive oil supply to UK could hit prices

Acesur, which supplies the UK's biggest supermarkets, told the BBC that this would feed into prices in shops in the next three to four months when companies renew their contracts.

The country, together with other parts of Western Europe that produce olive oil, including Italy and Portugal, has been experiencing extreme temperatures and lack of rain in recent weeks.

Acesur is involved in the production of more than 200,000 barrels of olive oil a year, out of the roughly 1.4 million tons produced in Spain annually, and sells its products in more than 100 countries.

It sells around 20,000 tonnes a year in the UK and packs own-label brands for Sainsbury's, Tesco, Waitrose, Morrisons and Asda. The supermarkets also stock the La Espanola brand, which is the third biggest in the UK.

Most of the olives in its products are grown in Andalucia, southern Spain, which has had very little rainfall in recent weeks.

Spain produced around 1.4 million tons of olive oil last year, but officials said that as little as one million tons were forecast for this season.

He said that the dry weather could affect the next season's crop, if olive trees could not grow new branches due to lack of water.

This is having an impact on global prices. The Mintec benchmark price for extra virgin olive oil went to its highest level this year in July, up 7.3% on the previous month and 14.2% on the previous year, according to the market research group.

Colmenero said that this would eventually feed into prices for customers, although there would be a three to four month lag because many companies would already have signed 12 month contracts with retailers.

He said companies would have to raise their prices when they renewed contracts and customers could see increases of 20 -- 25%.

The average price of own-label olive oil in the four biggest UK supermarket chains was up 50.2% at the beginning of August, according to retail research firm Assosia. Average prices went up 28.5% from June to July.

She added that if the grain corridor agreed from Ukraine resulted in more supplies of sunflower oil coming out of the country, this could bring some relief.