This year's olive oil crop is down by about 35 per cent, or 350,000 tons, after little rain and severe cold spells and snow hurt Spain's olive trees last winter.
The country is the world's biggest olive oil producer, accounting for a third of global supply.
It is therefore the last region to put out its numbers for the world market, which typically opens at the end of November. The situation in Spain this year has delayed the release of figures.
"In the next couple of weeks, when the numbers come out, there will be a 10-15 per cent decrease in prices for a short window of about two weeks," explained Jesus Mejias, export manager for one of the major brands Plaza de Espana.
"This is when all the big volumes are bought. Then prices will stabilize at a higher level for the rest of the year," he told NutraIngredients.com.
Prices for Spanish olive oil are already at record highs, at around €3.79 per litre of extra virgin wholesale, up more than 60 per cent since January. Next year, prices could be even higher, becoming "the most expensive seen in our time", predicts Mejias.
The high prices come at a time when demand from export markets is booming, boosted by a series of studies showing the health benefits of olive oil.
During the last 20 years, hundreds of studies have investigated the health benefits of the Mediterranean diet, of which olive oil is a major component. But recent months have seen some breakthroughs in pinpointing why olive oil has a protective action against heart disease and cancer, making an even stronger case for consuming more olive oil.
It is hard to tell whether health-conscious consumers will continue to pay more for these benefits. Last year, sales in the UK alone were worth £107 million, compared with just £1 million 20 years ago, according to AC Nielsen.
But a shortage of olive oil in Spain will force prices from other regions upwards too.
"This is like a domino effect. Buyers are going to other countries but because production is so low elsewhere, they are running out of supply," added Mejias, implying price rises across the board.
"People are now going to understand that this is a commodity," he said.