Cereal and olive oil production rise amid geopolitical challenges

The European Union's agricultural markets are demonstrating resilience in 2025, despite facing geopolitical and climatic challenges. According to the European Commission's latest report, cereal and olive oil production are on the rise, while other sectors such as wine and sugar face potential declines.

Economic Context

The global economic landscape remains uncertain, with geopolitical tensions and fluctuating trade policies affecting market stability. The EU economy is projected to grow at a slower pace, with a forecasted growth of 1.1% in 2025. Food inflation within the EU remains higher than general inflation, although some food categories are experiencing price stability. The appreciation of the euro could reduce import costs but may also make EU exports less competitive.

Cereal and Oilseed Production

The EU's cereal production is expected to increase by 4.1% in the 2025/26 season, enhancing the trade balance with a projected 26% rise in exports. Oilseed production, particularly rapeseed and sunflower seeds, is anticipated to grow by 12%, boosting vegetable oil output by 6%. However, protein crop production might see a slight decrease, although it will remain above the five-year average.

Specialised Crops and Animal Products

Olive oil production is recovering significantly, with a 37% increase, leading to a drop in prices by mid-2025. In contrast, wine production is predicted to reach a 20-year low, impacting exports as domestic consumption declines. Adverse weather conditions are expected to reduce apple production by 4% and peaches and nectarines by 5.8%, while orange production is set to rise by 4.6%. In the animal products sector, milk deliveries are stable, and poultry production is anticipated to grow by 1.8%, driven by increasing demand.

Market Implications

The EU's agricultural sector faces mixed prospects with varying implications for trade and prices. While cereal and oilseed markets are expected to grow, sectors like wine and sugar might require strategic adjustments due to declining production. The stable outlook for dairy and poultry indicates continued demand support, although beef and sheep meat markets could experience tighter supplies and higher prices.

Source