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Ever since crude oil was first discovered and became widely used, its price has been monitored across the globe, with wild swings impacting economies all over, for better or worse. But in recent months, volatility in another kind of oil has made headlines: olive oil.

Olive oil can be used when sautéing, frying and roasting, and is often a key ingredient of salad dressings and marinades. Central to a Mediterranean diet, olive oil is believed to boost longevity – it’s one of the foods featured in Live to 100: Secrets of the Blue Zones, Netflix’s ($NFLX) latest health documentary hit. 

However, olive oil supplies have been dwindling due to major droughts in the Iberian Peninsula and Italy, regions where most of the world’s olive production takes place. With demand remaining stable, this is making prices skyrocket to record highs of US$9,468 per metric ton. In a world that consumes roughly 3m metric tons of olive oil per year, we’re talking about an industry with US$28b in annual revenues. Rising prices could send shockwaves across restaurants and households globally.

The situation has even led to some daring heists, like criminals stealing US$500,000 worth of olive oil in Spain. Making a killing with olives is nothing new, though. Ancient Greek philosopher and mathematician Thales of Miletus reportedly forecast a record olive harvest in the 6th century BC and cornered the market for olive presses, amassing riches in what’s probably one of the first great financial trades on record.

It’s not just olive oil that’s on the up. Butter prices have also soared due to extreme heat in India, which led to cows producing less milk in one of the world’s biggest dairy producing countries. While this could lead to a cost increase for restaurants and dairy producers like Nestlé ($NSRGY) and Lifeway Foods ($LWAY), there are signs it could be short-lived: butter futures contracts at the Chicago Mercantile Exchange for the end of 2024 are currently trading in backwardation. That is, prices for November and December contracts are lower than current prices, suggesting investors believe prices are likely to drop by end of year.

Olive oil and butter are key components of many cuisines, but are you doomed if you want to sauté or deep-fry anything while on a budget? Well, soybean oil and lard prices are dropping. Or, if you’re looking for a unique and nostalgic flavour, perhaps you could go the way of old-fashioned McDonald’s ($MCD) and use beef tallow for cooking. This won’t actually be cheaper – tallow fat prices have indeed been increasing since the COVID-19 pandemic – but replicating the taste of old school Maccas fries might be priceless.


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