So much 'liquid gold' could hit the market that the world’s top producer is withholding output

Key Points:

• Spain’s agriculture ministry has mandated farmers to withhold 12% of their olive oil production until September 2027 to stabilize the market and protect both producers and buyers, aiming to keep 188,000 tons off the market amid a projected 23% increase in production this season.
• The measure is unprecedented but allowed under EU rules unless it causes excessive market distortion; however, the olive oil industry criticizes it for only applying to Spain despite the global nature of the market, and concerns exist about quality degradation during storage.
• Olive oil prices in Andalusia have already fallen about 15% in two months due to expectations of increased supply, and analysts suggest that existing large inventories held by buyers limit the order’s immediate impact on prices.
• Globally, other commodity reserves are facing challenges: Canada’s maple syrup reserve is nearly depleted amid rising demand and export spikes, the U.S. Strategic Petroleum Reserve is at its lowest since 1982 due to geopolitical tensions, and countries like Japan and China have fluctuated between drawing down and replenishing strategic food reserves in response to weather, disease, and market conditions.
• China’s pork market illustrates oversupply issues, with prices dropping 39% over four years despite government purchases to support the strategic reserve, reflecting broader challenges in managing commodity reserves amid volatile demand and supply factors.