Cheaper EU Olive Oil Reshapes Global Trade, But Margins Stay Under Pressure

Lower olive oil prices in the European Union are reviving global demand and pushing exports higher, but elevated production costs mean many producers see little relief in margins. Trade flows are shifting towards price-sensitive markets, while some traditional high-value destinations remain subdued. European Union exports are expected to gain further momentum in 2025-26 as international buyers respond to more competitive pricing. Yet the sector’s recovery is uneven: global consumption is robust and above its five-year average, but high labour and input costs, especially for small and traditional farms, continue to squeeze profitability and limit investment capacity.

Prices & Trade Flows

EU olive oil prices have fallen enough to stimulate a clear rebound in external demand. The European Commission projects EU exports at 794,000 tonnes in the 2025-26 season, a 6% year-on-year increase, underlining how lower prices are unlocking new buying interest. This price-driven shift is already visible in trade data: shipments to China doubled through March versus the same period a year earlier, while exports to Brazil, the United Kingdom and Japan also strengthened.

At the same time, the United States – still the world’s largest olive oil importer – has reduced purchases from the EU. The main drag comes from Italy’s poor previous harvest, which disrupted established supply chains and opened the door for non-EU suppliers, especially Tunisia, to capture U.S. market share with aggressively priced volumes. This highlights that lower EU prices alone cannot fully offset supply constraints or lost origin-specific demand in key premium segments.

Global Demand Landscape

Global olive oil consumption remains historically strong. According to International Olive Council data, worldwide use reached around 3.2 million tonnes in 2024-25, slightly above the five-year average and almost double the levels seen in the 1990s. This confirms that structural demand growth – driven by health trends, diversification of diets and the expansion of middle-class consumers – is intact despite recent price volatility.

Lower EU prices are amplifying this underlying demand by making olive oil more accessible in emerging and price-sensitive markets. The strong import response in China, Brazil and other destinations suggests that consumers and the food industry are quick to take advantage of more affordable product, potentially locking in higher baseline consumption if prices remain moderate. However, the uneven performance across destinations, with the U.S. lagging, shows that local supply alternatives and branding dynamics still play a decisive role.

Producer Economics & Margin Pressure

For European producers, the downside of softer prices is persistent margin compression. Costs for labour, energy, fertilisers, financing, logistics and regulatory compliance remain elevated, eroding the financial benefit of higher export volumes. Even as sales recover, many growers face limited profitability, constraining their ability to invest in orchard renewal, irrigation efficiency and sustainability upgrades.

Smaller farms and traditional olive groves are particularly vulnerable. Their unit costs tend to be higher and less flexible, so price declines are harder to absorb without scaling back operations or delaying maintenance. The current environment therefore favours more efficient, larger or technologically advanced producers that can leverage economies of scale and mechanisation, potentially accelerating structural consolidation in some producing regions.

Outlook & Strategic Implications

The near-term outlook points to a gradual strengthening of EU export volumes supported by competitive prices and resilient global consumption. If cost inflation stabilises, producers could see incremental margin improvement from rising throughput. However, the sector’s recovery will likely remain uneven across regions and farm types, as input costs, access to finance and exposure to premium versus bulk markets differ significantly.

In parallel, the reorientation of U.S. sourcing towards non-EU suppliers underscores the need for European exporters to defend and deepen their presence in fast-growing markets such as China and Brazil, while rebuilding reliability and value propositions in traditional high-income destinations. Balancing volume growth with sustainable margins will depend on continued efficiency gains, targeted market development and risk management against weather and regulatory shocks.

Trading & Risk Management View

• Importers in emerging markets may secure medium-term contracts with EU suppliers while prices remain relatively low and export availability is improving.
• EU producers and cooperatives should prioritise cost-control measures and value-added segmentation (origin, quality certifications) to defend margins in a lower-price environment.
• Traders should monitor U.S. demand rebalancing and Tunisia’s competitive positioning, as any recovery in Italian output could trigger a reshuffle of flows and differentials.

Short-Term Market Tone (Next 3 Days)

• EU export indications are likely to remain firm in volume but capped in price, as buyers leverage abundant offers and producers seek to lock in sales.
• Premiums for high-quality and origin-specific oils (e.g. Italian) may hold relatively steady given tighter supply, even as bulk categories stay under pressure.
• Overall, the near-term bias points to stable-to-soft prices in EUR terms, with downside limited by strong baseline global consumption and improving trade flows.