Market Report
CITRUSANDALLIED.COM
CITRUS AND ALLIED ESSENCES MARKET REPORT OCTOBER 2013
October 2013 Volume
3 In this issue:
Page 1
4Orange oil
4Lemon oil
4Page 2
4Lime oil
4Grapefruit oil
Page 3
4Tangerine oil
4Rob’s Crystal Ball
Page 4
4Essential oils
4Cananga
4Davana
4Ho Wood
4Lavender/Lavandin
Page 5
4LemonGrass
4Mint- Pepermint/spearmint
4Spice Oil & Oil Extracts
4Cassia & Natural
Bezaldehyde
4Cardamom
4Clove leaf
4Coriander
Page 6
4Cumin
4Ginger
4Mandarin Petitgrain
4Nutmeg
Page 7
4Pimento Leaf
Orange Oil
The 2013 crop in Florida has been
processed. (Recently, the words
greening, disease & HLB have more
meaning). The yields and total boxes
were lower than originally expected.
This led to a firming of prices
throughout the season. Most of the new crop oil has been
sold. The Brazilian producers have been reticent to offer
quotations based on the amount of oil sold forward last year.
We are told that the total production from the current crop
will be down dramatically thus making it difficult for them to
offer new volumes.
Prices have moved up. In addition, a burst of selling for
D'limonene from Florida has led to a weakening of the
market for orange terpenes. This combination of higher
prices for orange oil and lower prices for orange terpenes is
unsustainable and will lead to a rebalancing, one way or the
other.
Lemon Oil
New crop lemon oil is being
offered at source at prices that
represent increases of 20%,
when compared to the
previous season. Between
slightly lower volumes in
Argentina and much lower volumes in Spain, carry-over
inventory is gone. We expect the higher prices to hold and
for the market to remain steady barring any further weather
events.
Lime Oil
The record high prices for processed fruit and lower
prices for lime juice have put a lot of pressure on lime
oil, both distilled and expressed. The devastating citrus
greening disease has reduced lime oil production by
over 40% in Colima. Considering that approximately
half of all Mexican lime oil is produced in Colima, the
impact on availability and pricing is more profound than
at any time in the past 25 years. We expect prices to
continue to firm as some long-term producers are either
producing very little oil or none at all.
The price of lime juice is dependent on the price of
lemon juice so there is a little relief in sight, but not
much.
Grapefruit Oil
Prices for Grapefruit oil have stabilized.
The price is based on the quality and the quality is
dependent upon the level of nootketone, taste and
agricultural residues. Pink oil continues to be less
expensive than white oil.
Tangerine Oil
The supply and demand for Tangerine are either in
balance or just out of balance with demand slightly
higher than supply. This is certainly one oil where it
pays to be ahead.
We do not expect the situation to change as supply is
limited and demand varies.
Rob’s Crystal Ball
As many of you are aware, our portfolio of products number in the
many hundreds. For that reason, we are exposed to a variety of
specific inputs. So many, in fact, that our view of pricing trends is
often based on macroeconomics rather than the microeconomic
influences that affect pricing of individual essential oils and chemicals.
Before addressing the primary macro issue that we see today, we
want to touch on the factors that influence the price direction of
individual products.
In a nutshell, weather wins. Not supply and demand you ask? And
our answer is that the demand for most essential oils is almost always
in synch with supply because the demand for most products is mature
and predictable. For that reason the market has an anticipated
demand and producers are prepared for what they are used to. So
what is left to move prices are factors that influence yield and cost
such as weather and currency exchange rates. However, the winds
of change seem to be blowing from a different direction than what we
have seen for a long time and that fresh breeze from a different
compass point may be the dominant macroeconomic reason for price
movements going for the next year or more.
Heretofore, the demand for most products has been somewhat higher
than predicted because the national demand within the fast-growing
economies in India and China has been both increasing and hard to
predict. For the first time in a long time, it appears that indigenous
demand from these countries has slowed. More than any other
factor, this has made it possible for prices to assume a steady course.
Certainly, crises such as what we are seeing with lime will come and
go but if the world experiences an extended period of slower growth,
it is possible that yo-yoing prices may be the exception rather than the
rule. For any one involved in supply chain management, that would
certainly be a welcome change.
Should the economic slowdown continue, we may arrive at a point
where farmers will hold off on production unless they have
commitments. As you will see in this report, a small handful of citrus
oils are under some pressure with disease and uncharacteristic
weather that has even caught processors by surprise. Therefore, we
will continue to do what we do every day and communicate and visit
our traditional suppliers face-to-face to try to make the best
recommendations we can to our customers. In the land of essential
oils, almost every product has a story and always an interesting one.
We hope everyone enjoyed their summer and is rested for what will
be another challenging bouncing crystal ball!
Essential Oil
Star Anise & (Natural Anethole)
This southwestern essential oil grown in the Yunnan province of China has gradually softened over
the past year somewhat due to the availability of synthetic anethole and a lack of demand. The
farmers prefer to produce from the fruit because they can earn more money than producing from
the leaf to make the essential oil. We have seen a few different qualities in the market place which
is worth noting. While the price of natural anethole has softened, the price of star anise oil has
probably come close to a low point, as farmers are not willing to take less for their investment and
labor. The peak crop time is October to January. We continue to be in a strong position and
welcome your inquiries.
Basil
It is reported that the 2013 crop out of Vietnam is harvested and 50% is already sold. We would
recommend staying ahead until we have a better understanding of the next crop in July of 2014.
One would expect the prices to firm if the supply continues to disappear into the New Year.
Bay
It has been reported this Caribbean based essential oil is experiencing poor yields. We would
suggest only buying as needed until the yields begin to show improvement. It is likely demand could
exceed supply over the next 6 to 12 months.
Bitter Orange
The new crop in Brazil is well underway. As previously noted, the lack of demand a few years ago
led to many of the groves being eradicated. Accordingly, this lack of interest and poor returns has
now led to an apparent shortage in the market place. Price remains firm with little availability. To
compound the situation, poor availability and rising production costs in the Dominican Republic
have added even more pressure on prices. We continue to contract and take strong positions but
cannot get the volumes we wish to procure due to the lack of availability in both the northern and
southern hemispheres. Therefore, it is important to give us your requirements ahead of time so we
can do our best to cover your needs.
Buchu
Buchu is out of balance. The betulina volume and quality has remained constant but the shortage of
crenulated quality has been significant over the past two years. Back in 2009 the demand was so
weak that farmers pulled out portions of their crops replacing with crops like table grapes, which
gave them better returns. In addition, recent fires in the mountains have wiped-out the planting
areas in the Western Cape. It is hoped that the balance of the two qualities will improve in the years
to come.
Cardamom
It is reported that the new crop in India will be down as much as 30% due to flooding in the growing
regions. Guatemala's peak season (October to March) is now over and the season went well at
approximately 38 MT. This year's crop is projected to be a good one, like last year. The price of
Guatemalan material remains stable. We think the best time to contract will be in
December/January. Since we are significant buyers, we have a good position on this spice essential
oil.
Carrot Seed
For the second season in a row, the cold and rainy weather conditions has hurt the yields on this
unique crop. Prices are reported to be increasing in the coming month.
Cassia & natural benzaldehyde
According to our sources, the market is stable after the spring crop season. In addition, please keep
in mind that two markets now exist for cassia oil which are the traditional and new method. Both
methods are priced based on demand which tends to fluctuate during the course of the year. In
recent weeks, the demand has picked up from producers of natural benzaldehyde which has put a
little upwards pressure on price. To summarize the many reports I have read, the future sentiment is
for firming prices, but time will tell. The autumn crop begins in October.
Citronella Java
With the new crop starting in April-May, this almost commodity- like essential oil looks to be stable in
the short term. This, of course, barring any weather issues and steady global demand.
Clove Leaf & Eugenol
Oil is limited, due to a longer than usual rainy season in Indonesia (November to May). The wet
weather has prevented the leaves from drying properly, negatively impacting the harvest and yields.
Not surprisingly, prices have firmed in Madagascar and Indonesia since hitting an apparent bottom
late last year. It is mentioned that if the dry season does not take place in September or October,
the price could continue to climb. We welcome your inquiries.
Coriander
The Russian crop was harvested late due to heavy rains during the second half of July and first
week of August. The coriander seed market currently has strong demand by the spice industry due
to lower crops this year in India and poor crops in Eastern European countries such as Romania
and Bulgaria. Less essential oil will be distilled this year than planned a few months ago due the
lower quantity of seeds available to Russian distillers. Distillers will not commit to a price level at
this time, but we are expecting a hefty increase compared to the current price. After many years of
carryover stocks in the hands of resellers, at present we are not aware of stocks of oil in Russia,
although possible carryover of coriander seeds could help the situation. Carryover stocks of oil by
exporters are minimal due to the low price level over the past two years. We welcome your inquiries
and orders!
Cumin seed
Again, with the strife in the Middle East, including the political instability in Egypt, we recommend
that you cover your needs for the next year. To make matters worse, wheat a cash crop, competes
with cumin and as a consequence, the production continues to diminish. New crop production
begins in April, which we recommend is the time to look at your volumes. Keep in mind the prices
and availability can take a dramatic turn as the dynamics of the region unfold.
Spice Oil
Davana
The distillation has finished in the state of Karnataka, India. During my recent visit to all regions in
India, we learned that there are fewer farmers and less sowing, as the recent below-cost prices
have made this beautiful oil less interesting. However, all things considered, the prices continue to
sputter. The next season starts in February, so we will see if the growers who cite irrigation
problems, high food inflation, high labor costs and expensive land prices will cultivate less or more
than this past year. A more recent development in speaking with farmers is the alternate crops of
onions, potatoes and vegetables which can yield the growers much better returns. New davana
cultivation begins in late October and the inventories are nearly exhausted. We suggest covering
your needs while limited supplies last.
Eucalyptus (Eucalyptol)
In the summer, the price softened on the good crop and supply. In fact, many local distillers in the
Yunnan Province claimed they lost money on the low prices. In recent weeks we have seen the
prices gradually firming as the inventories dwindle and rain delays hit the growing areas. With the
autumn crop ready to begin, we think the next best time to contract will be in December.
Garlic
As predicted, prices of Garlic oil are advancing due to continued strong demand and scarcity of high
quality garlic oil. After years of little-to-no processing, it appears the stocks of good quality garlic oil
are becoming limited. As stated in our last report, for reasons nobody is able to explain, the
production of garlic oil has not met the physical specifications of the FCC. We believe this has been
due to atypical weather. Unless the price of fresh garlic bulbs comes down and the garlic (slice) a
by-product is available, it is reported that there will be almost no new production in 2013. Again, we
urge our customers to cover sooner than later as quality garlic oil is becoming harder to source.
Geranium
It is reported that supply and demand for geranium will be in harmony which should provide pricing
stability.
Ginger
As we stated in our last report, with fresh ginger prices rising, poor quality roots, coupled with weak
demand, have left prices as low as they can go. The next crop is December through February.
Based on the distillation costs and the increasing high fresh ginger prices, this oil is destined to
increase in price. Given this information, we are covering good quality oil, with customer contracts,
and monitoring frequently at source.
Ho wood (Natural Linalool)
Due to extreme heat in the growing region, the production and availability of ho wood oil in China
over the next 6 months will be reduced. While the price softened last year, like many Chinese
essential oils, Ho wood oil is now in short supply. We continue to have ample supply, but need to
hear from customers well in advance on large quantities, to cover your needs.
Lavender
In Bulgaria, the 2013 news for lavender was even better than the news in 2012. It is reported, while
difficult to confirm, the production exceeds last year's volume. It is ironic that after two years of bad
news, we have had two years of good news. Finally, the production went up, not down as in
previous years. C&A has taken positions on specific lots of excellent quality oil and we look forward
to your inquiries. On the French Lavandin side, the scarcity is mainly due to the heavy rains and
frost during April-May which delayed the crops for 3 weeks. Then rain storms and hail destroyed the
flowers. It is reported the production has been reduced by more than 20%, whereas the
consumption is estimated to be increasing. Therefore, the availability of lavandins will be short for
the next year.
Lemongrass
In a repeat of our last report, we see Lemongrass in Guatemala slightly higher than last year. We
continue to take solid positions to cover customer contracts, on this modest-volume essential oil
from Central America. As previously noted, it has become necessary to contract in advance to
insure enough is planted and processed into oil each season. Please send us your inquiries.
Litsea Cubeba & Natural Citral
The distillation of the new crop is coming to an end. Given the low price of the berry and the warm
weather, the output will decrease by 10-20% compared to last year. We would recommend figuring
out your needs and contracting sooner than later.
Mandarin Petitgrain (Mandarin Petitgrain Terpeneless)
Processing in Egypt has been in full swing since January. The crop was better than expected, which
caused the prices to soften during the year instead of increase. The crop is now complete and
prices will begin to firm. We would recommend that if you haven't covered your needs that this
would be a good time to take advantage of the recent price decline at source. Otherwise, in this
politically unstable part of the world, the situation could change overnight.
Mint – Peppermint/Spearmint Oil
All in all, the growing season in the Pacific Northwest was normal. While visiting each region and
talking to our scores of growers, I learned that the weather was cool and rainy in some areas, very
hot in others with a lack of water in another. Taken together, the overall production numbers met
expectations. The lack of water supply could be a bigger issue next season in Idaho unless the
snow pack is significant this winter. Unfortunately, the region-specific qualities we expect to see from
each production region, varied more than in a normal year. Fortunately, our broad-based supply of
American Peppermint Oil and expertise in blending individual lots based on flavor profile, enabled us
to meet this challenge. While we have heard the cumulative acreage will be down, the demand
seems to be a little soft. At this time of year, we are selecting oil from farmers all over the US. Our
recommendation would be to cover your needs after the harvest season. In contrast to peppermint,
spearmint prices are firm due to the continued good demand and smaller crops in China & India.
Nutmeg
The news remains the same, as we last reported. The sourcing of quality nutmeg continues to
present a challenge. While the prices may have stabilized disease, immature trees, new planting
regions (with varying qualities) and excellent demand on ground spice, are the reasons for the
limited availability on good quality nutmeg oil. Many large spice buyers often ask why is the oil price
increasing and or not coming down relative to the whole spice prices. In many cases, the immature
spice nutmeg is best for processing into oil. In previous years, the immature spice sold at a lower
whole spice price, now the immature (oil-content rich) spice command a premium price.
Palma Rosa oil
Prices have bounced back up from their short-term recent lows. This was in part due to extremely
dry weather, which caused the distillation to cease for 2 months. This news, along with little to no
irrigation, has distillers and traders holding onto limited stocks. We recommend covering your needs
now to take advantage of the prime time to cover.
Petitgrain Cordillera
The production is limited due to the atypical cold weather in Paraguay. The main production time is
in September when the production should increase. Since demand is firm, material may be limited
into next year's slow season.
Pimento Leaf
Hurricane Sandy did affect the Pimento leaf crop as the damaged infrastructure (roads) in Jamaica
made the collection and distillation of the leaves nearly impossible. It is reported that Jamaica is sold
out. The next season is gearing up with the collection of leaves. We hope to have more information
in the next month from our processors in Jamaica. At present, if you need material call us.
Rosemary
With the instability in Tunisa, Rosemary prices are destined to firm.
Sage Clary
The news on this essential oil seems to get worse by the month. At present, the availability is close
to non-existent and we have reports the availability will get substantially worse into 2014. In the near
future, the demand will surely exceed supply.
Sage Dalmation
Due to the strong demand, this eastern European oil is firming.
Tagette
The demand for South African tagette oil remains high. The product has also been short by approx.
20% for the past two seasons. This year looks to be about 10% short. It is expected that the supply
will start to increase by 15% annually for the next few years, which should help the availability.
Wintergreen
New crop at source is coming to an end. This is good news as no material was available at source
prior to the new crop. We would recommend covering your needs to take advantage of the lower
prices while they last.