MARKET REPORT November 2017
B E R G A M O T O I L - I TA LY Favorable growing conditions over the winter and spring time provided the right environment for when the trees start to blossom (April) resulting in the first truly lush and large blossom in 3-4 years. Excellent water, temperature, and weather conditions have carried on into late June allowing small fruits to be strong enough for the arrival of the first summer heat wave which arrived in Calabria in late June. After 4 additional heat waves, September brought welcomed rainfall as many farmers had to water their trees more than usual this season. A strong crop is still expected even if it is too early to reliably predicate yields. A clearer picture should emerge in the next 4-5 weeks with the first extraction set for mid-november. L E M O N O I L - I TA LY 2017 s production of lemon oil has been slightly less than average with the price of fresh fruit remaining firm due to juices prices and the reduced crop in Argentina. The market for lemon oil is relatively stable with Argentina taking the lead in setting stiff prices. A regular crop is expected this year in Sicily in terms of availability but prices will reflect the trends of both the global juice and oil markets. M A N D A R I N O I L I T A LY Mandarin also faced similar growing conditions to the Italian Bergamot, with a favorable start to the year but also subject to the numerous heat waves. A good deal of cascatura (small fruits drying out on trees and falling) took place both physiologically and because of the heat waves. Expectations are that this year s crop will be very similar in size as that of last year. There is no reason at this stage to forecast any changes, the only missing parameter is yield which shall be determined in a few weeks once the first runs of pelatrice for the green mandarins are completed. Of note, the ripening process has been slightly slower than last year due to a lack of water in certain areas including western Sicily.
BLOOD ORANGE OIL ITALY Similar to lemon, conditions are favorable for the blood orange crop from Sicily. Prices will follow the market trend indicated by Brazil and Florida. ORANGE OIL USA The USDA recently released their estimates for this year s orange production in Florida, coming in at 23 million boxes of fresh fruit for the non-valencia oranges and 31 million for the Valencia variety. Various farmers have disputed these numbers claiming the USDA did not have adequate time to evaluate the impacts of Hurricane Irma and as such they are expecting an even lower yield this year. The new forecast is set to be released on November 9th which should give a better view into the situation. There is a bit of potentially good news within the USDA s analysis, average fruit size is up this year as well as the amount of fruit per tree. Hopefully this will lead to better crop sizes and yields in the years to come. GRAPEFRUIT OIL USA USDA estimates this year s grapefruit production to reach 4.9 million boxes of fresh fruit, with 4 million boxes of red Grapefruit and 900,000 boxes of white Grapefruit. As with orange, there is still a chance these numbers could be downgraded further. The new forecast set to be released on November 9th should shed new light on the situation and provide a better estimated of final yields.
E U C A LY P T U S O I L G L O B U L U S C H I N A The last major crop, ending in January, was lower than expectations due to the excessive rains. Speculators, trying to take advantage of a volatile situation, entered the market late last year after seeing a decrease in production of around 10%. Current production levels are around 30% lower than those of 2015, which is reflected in the 30%+ increase in price since that same time. New production should be available towards the end of the year which we had hoped might ease market pressure however continued upward trends are persisting with little or no offers being made from traditional sources. E U C A LY P T U S R A D I ATA A U S T R A L I A The total production from Australia is estimated to be around 7mt annually, with demand potentially 3 times as high. By 2018, several new plantations should begin production but there is nothing to indicate current pressures from the market shall subside. Prices are expected to keep rising as more companies begin to take positions to leverage end-user demand. E U C A LY P T U S R A D I ATA - S O U T H A F R I C A Global demand for this oil continues to increase at a time when production seems to be decreasing across the board. Most oil produced is in small batch quantities and as such are not able to fill the demand for this oil. Efforts have been made to expand the production of this oil in South Africa, including extensive new plantings which should become available in 2018. Until that time there will be challenges to meet the total demand for this oil.
CHAMOMILE BLUE EGYPT 2017 had a decent harvest that seemed to satisfy demand. The harvest started in April, which is also the same time most buyers entered the market. Today supplies are limited but much of the demand has been satisfied and isn t expected to increase until 2018 s crop. Prices should remain stable. CHAMOMILE OIL ROMAN - ENGLAND Demand has been very strong, exceeding supply and with this year s crop being less than last year prices remain firm. There is very little availability for this oil, just a few sporadic lots being offered in the market. CITRONELLA OIL CHINA Output has been negatively affected by this year s heavy rainfall. Prices have been rising steadily month after month and are expected to keep rising as the raw material necessary for production and the oil itself are both in short supply. LITSEA CUBEBA & NATURALL CITRAL CHINA The market has started to stabilize albeit at a price higher than the first half of 2017. The production cycle has just been completed meaning inventory levels are sufficient for the moment helping to keep prices stable. The customers who have a large annual demand for these products might want to start considering purchasing stock.
TEA TREE AUSTR ALIA This year s main harvest has been delayed due to the excessive rainfall and flooding experienced earlier this year by many parts of the country. Typically occurring in June, many farmers delayed harvesting their crop to allow the ground to dry and the plants to recover. Despite this fact, losses are not as bad as initially feared, showing the resilience of the tea tree plant. Some farmers are dealing with a total loss from flooding estimated to be around 20-30% of the overall crop. This is offset by the recent addition of new growing areas. TEA TREE - CHINA Demand has remained constant and supply seems to be stable. As the price of Australian tea tree rises, demand for this oil increases. Due to the Australian dollar losing some value recently, export prices for the Australian material has become more favorable even if local prices have increased. This year saw additional new growing areas being cultivated but the demand for tea tree continues to grow globally. Therefore, it is unlikely to have much effect on pricing. TEA TREE - SOUTH AFRICA South Africa has made a lot of investment into tea tree in the hopes of competing on the global stage. In the past, South African tea tree has had a bad reputation in the industry but recent advances have shown this product to match the analytical results of the Australian variety and with an aroma profile equal or arguably better than the Australian product. Instead of using machinery to harvest, much of the South African tea tree is picked by hand, while it does add costs to the process it also provides opportunity to the local communities and gives them an incentive to seek Fair Trade and Organics certifications, providing potential marketing benefits to the end user. This season s harvest saw increased volumes with around 140mt of both the organic and conventional oil produced or around 15% of the global supply. Growing areas are still expected to expand over the next few years, hopefully enabling South Africa to become a major player in the tea tree market.
STAR ANISE & ANETHOLE - CHINA Prices have somewhat stabilized since the last crop. Availability shall hopefully improve after the new crop is harvested but output is expected to be limited for at least the next two months. Coupled with the farmer s expectation of higher margins, price is expected to keep rising. GUM TURPENTINE CHINA Gum turpentine is an extremely important raw material for the flavor and fragrance industry. It is used to manufacture a variety of products including, Camphor, Iso-Bornyl Acetate, Terpineol, Terpinyl Acetate, etc. Having reached the bottom of the market in the end of 2015, the price of gum turpentine continues to rise and has reached a new peak in 2017. Users of turpentine expect the price of turpentine oil to decrease as the new crop becomes available, mirrored by the slight price decrease witnessed in June and July. August to September is peak season for gum turpentine, which impacts the market for the entire year but unfortunately this year there has been no major surge in the supply available. As environmental regulation in China becomes more and more strict, several smaller factories have been forced to close leaving only 300 factories left out of the 800 that were operating in 2012. Also compounding the issue is the fact that the price of gum rosin has been decreasing. Both gum turpentine and gum rosin are extracted from pine trees with gum rosin typically going into the adhesive industry. As the adhesive industry started to use more petrochemicals and less gum rosin, many farmers are looking to offset the loss of gum rosin profits by keeping the price of gum turpentine strong.
L CARVONE CHINA With the rising prices of d-limonene, impacted by the same issues as are all orange products, producers are now faced with increased raw material costs. Price is anticipated to increase for this material moving forward. PHENOL CHINA The price and availability of Phenol has a large impact on many aroma chemicals as it is one of the most important raw materials for Coumarin, Salicylic acid, Salicylate, OTBCHA, PTBCHA, and Vanillin. On October 16th, the Phenol commodity index was 59.64, a decreased of 40.36% compared to the highest point 100.00 September of 2011 and an increase of 42.99% compared with the lowest point on January first 2016.
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