ROB’S CRYSTAL BALL
AN ESSENTIAL OILS MARKET REPORT
FEATURED Bitter 04 Bay 05 07 Ginger 07 Neroli CONTENT Orange
1 of 8 SUMMER 2020
CITRUS ALLIEDAND EST. 1933
PRINT [email protected] 410.273.9500 ROB’S CRYSTAL BALL
AN ESSENTIAL OILS MARKET REPORT
SUMMER 2020
Overall, the global pandemic is driving sufficient to meet demand, there is a most of the developed economies into a wide disparity in the prices of different forced recession. Should we experience qualities. The most expensive oil, by far, four consecutive quarters of declining is white grapefruit oil with a nootkatone economic output, the dreaded phrase content of greater than .2%. The least “economic depression” will accurately expensive is red grapefruit oil with less describe the situation. than .1% nootkatone. If your company is developing a new product and will These circumstances, considered from be incorporating grapefruit oil into your the perspective of a buyer, leads us to flavor formulation, you might want conclude that any case for higher prices to consider red grapefruit oil with a of essential oils needs to be compelling nootkatone content of .2%. This will because of the weight of multiple provide a happy medium in terms of both unknowns hanging over the economy price and quality, which will offer peace as a whole. If the global situation has his is the first market report of mind in terms of future availability. we have composed since the created a pricing bias, it is likely towards For fragrance formulations where the use Tbeginning of the global pandemic. the continuation of low prices for most of a light color oil is needed, consider While our analysis of the direction of essential oils and aroma chemicals, using a decolorized grapefruit oil. C&A markets is always based on information particularly chemicals derived from offers a product that is based on pink regarding supply and demand, we petroleum. oil with a low nootkatone content, so, temper the cold hard facts with a In terms of citrus oils, we will set forth the price is reasonable and the aroma is strong dose of judgment based on our conclusions in a straightforward lovely. decades of experience. For this report, manner. We think there is a good chance it is important to note that no one has that prices for orange oil have bottomed While we often find production numbers previously seen the combination of and we would not be surprised to see to be less indicative of price directions circumstances we all are experiencing. prices move up. We also believe there than you might think, with grapefruit, the Therefore, it is sensible to consider that is a possibility that the price for lime oil size of the crop does indeed tell a tale. the process of collecting information distilled will firm. For all other citrus oils, The total 2020 grapefruit crop in Florida and sorting out the facts may not we believe that, for the most part, there is estimated at 5.5 million boxes. This is provide pricing insight when compared is a solid chance that prices will remain an anemic number when you consider to the weight of the influence of the at their current low levels. Now let us that twenty years ago it was ten times current global situation. wade into the weeds. higher. Considering that citrus greening is as prevalent in grapefruit groves as What we know is that there has been it is in orange groves, the once robust a considerable dislocation in both SELECT PRODUCTS grapefruit industry in the United States the ability of manufacturers in all will continue to experience challenges industries to produce, as well as a for the foreseeable future. shift in consumer demand for certain GRAPEFRUIT categories of food products, due to the elimination of restaurant dining. The price for both red and white KEY LIME - In the United States, the fast-casual grapefruit oil experienced a collapse in DISTILLED AND EXPRESSED restaurant sector is slowly re-opening 2019. For the first time in many years, and the predominant option for meal there was more supply than demand. Over the past few years, the markets supply is home-cooking. In the U.S., This resetting of prices for grapefruit was for distilled and cold pressed lime oils visits to supermarkets have decreased welcomed by buyers and will probably have provided buyers with an emotional in frequency. During those less frequent lead to an uptick in the use of grapefruit sanctuary from the anxiety-inducing shopping experiences, shoppers are oil and eventually, in demand. markets for orange, grapefruit, and predominantly purchasing household While the production of red and white lemon. While the prices for those three staples. grapefruit oil in the United States was primary citrus oils have fallen, due to
02
[email protected] 410.273.9500 ROB’S CRYSTAL BALL
AN ESSENTIAL OILS MARKET REPORT
SUMMER 2020 a combination of excellent weather have blemishes, go to the fresh market expressed oil is firm but has not gone conditions and anemic demand, lime instead of for processing. This is where up to the same degree as oils produced oil has lost its status as the most boring we are today. As a result, the cost of from key limes. citrus oil. producing lime distilled has increased to levels not seen since the early 1990s. In the past three years, the amount Expressed lime from key lime fruit is of production of lime oil in Mexico LEMON experiencing the same supply issues as has been below traditional levels. distilled with the same upward pressure The primary reasons for this are a on price. In 2019, the price for lemon oil hit a combination of low demand for oil and ten-year low. The low prices were due to the effects of citrus greening disease. As we have previously mentioned, excellent crops in Argentina and Spain, Citrus greening has had more effect on there are few processors of Lime oil in as well as healthy crops in the United the production of Lime in Colima than in Mexico and most of the production is States and Italy. Michoacan. The extremely hot weather done against contracts. For that reason, in Michoacan seems to have protected it is uncommon for much carry-over In January of 2020 the Mediterranean the fruit from disease better than the inventory at the end of the May through countries of Spain and Italy began weather in Colima that is only hot. In September processing season. their winter season of production of lemon oil. Production in Spain was Colima, there have been considerable For those of you who are familiar with down by 20% and production in Italy plantings of new trees that are being the lime oil market, you know that there also declined, but by a less significant planted more closely together than is production of distilled oil in Peru. percentage. traditional planting. Lime trees appear Peru has never quite lived up to its to be more tolerant to the disease than potential when it comes to producing We are on the verge of production in orange and grapefruit trees. lime oil. There always seems to be a Argentina where 50% of the global Demand for lime oils in 2020 has factor that takes what everyone hopes supply of available lemon oil is improved. At the same time, the price is going to be a good season, and turns produced. Currently, the consensus for industrial fruit has increased by it into a disappointing season. This year, is that production will be down by 50%. There are multiple reasons for production met C&A’s expectations and approximately 20% to 1,150 tons. this increase in the price of industrial provided a safety valve to relieve supply However, it is helpful to remember that fruit. First, there is less supply of fruit. pressure. The crop is mostly produced in the reduction comes after two very Second, there is competition for the January and February and we are hopeful big years in 2019 and 2018 when the fruit by processors. Third, fruit that in that, come 2021, there will be meaningful production numbers were reported previous years would not have been production of distilled lime in Peru. at 1,410 tons and 1,350 tons. Those acceptable by the fresh fruit market is high production numbers resulted in being accepted this year. Fourth, there is a substantial amount of carry-over a labor shortage due to the coronavirus PERSIAN LIME - inventory from last season. throughout the supply chain. In turn, EXPRESSED weak demand for lime pectin and lime If it were not for the effect of the coronavirus, we would probably be juice has led to high prices for lime oil, In Mexico, Persian limes grow on the cautioning our customers to prepare since the cost of fruit must be allocated east coast of the country. Unfortunately, for a bounce in the price for lemon oil. across the various products that are the east coast of Mexico experienced However, if the demand for carbonated derived from the fruit. a severe drought in 2019-2020 which beverages is reduced due to restaurant resulted in much smaller crops of both Growers and packing houses and hotel closings and if summer orange and Persian lime. Strong export obviously prefer selling fresh limes comes to the northern hemisphere with demand for fresh fruit to the US has to supermarkets than to selling them continued shelter in place and social limited the amount of fruit available for at lower industrial prices. When distancing requirements, it is not difficult processing. This has resulted in upward the demand and price for fresh fruit to see how that would negatively pressure on the cost of industrial fruit increases, some of the imperfect fruit impact the consumption of carbonated for processing. As such the price for that may not be the ideal shape or beverages. In that case, even in the face
03
[email protected] 410.273.9500 ROB’S CRYSTAL BALL
AN ESSENTIAL OILS MARKET REPORT
SUMMER 2020 of lower production we think it is likely by over 20% for the 2020 production STAR ANISE & that lemon prices would remain low or season to 370 million boxes. While the NATURAL ANETHOLE perhaps go up ever so slightly… size of the total crop may be down by over 20%, it is likely that the percentage Prices have held firm with reports of fruit for processing will decline of actual shortages at source. We ORANGE even further. Given the fact that there recommend staying ahead on these has been a steady demand for orange Chinese-origin essential oils. Orange prices reached the bottom oil from Florida at higher prices, the around November, 2019. Factors which lower production in Mexico and lower expected production in Brazil suggest tipped the balance include: Anemic BASIL buying in the summer of 2019, combined that the Brazilian orange oil will be with large crops in Brazil and Mexico, priced at a higher level in 2020 than in as well as an expected rebound in 2019. The favorable weather in Vietnam that was mentioned in our 2019 Winter production in the US. As such, we were The unknown factor is demand. The Market Report has continued to develop able to cover considerable quantities of question is, will the world in which we a good crop and stable prices. Please orange oil at low prices. are all living today, with country-wide has inquire soon so that your needs can be spiked, providing the growers and juice Over the winter the consequence of the secured. severe drought in eastern Mexico made processors with a welcome break from it clear that there would be considerably a long saga of lower demand and low less oil produced in 2020. By the time prices. production was underway in Florida, There certainly is a case to be made BAY it was generally acknowledged that that orange oil prices will continue to production in Mexico would fall by increase, but perhaps not as much as Bay is back in Dominica, after many over 40%. As you can imagine, this was they would have if the coronavirus had years of little to no production due to viewed as welcome news to the Florida not resulted in a global recession. challenges such as the devastating producers and they offered orange oil at One factor that currently supports the hurricane’s in 2015 and 2017. The prices that were higher than would have case for modestly higher prices for hurricanes severely damaged distillation been the case if expectations in Mexico orange oil is the demand for orange operations and the island as a whole were less bleak. Those higher prices have terpenes and d-limonene. Both are used is still recovering. C&A has boots on been supported with demand. in household cleaners and the demand the ground to bring this beautiful oil The crop in Florida also experienced in that sector is quite robust. Orange from Dominica back in distilled and an unusual heavy fruit drop. Some of terpenes are produced as a by-product terpeneless formats. the fruit was picked a little early out of from the folding (concentrating) of fear there would be no labor available orange oil. The market for orange due to the coronavirus. The oil met terpenes is elastic, meaning more is used specification but was not excellent. at lower prices and less at higher prices. BERGAMOT Orange production in California will also If the demand for orange terpenes can be down by single digit percentages. be sustained with higher prices, then All told, orange production in the US is there is a case to be made that higher The bergamot crop in Italy ended in estimated at 120 million boxes down prices for orange oil will be tolerated February where production was down from almost 126 million boxes last year. by the buyers. If the demand for orange 20%. Unfavorable weather conditions have resulted in lower quantities of fruit In Brazil, warmer temperatures and low terpenes will not support higher prices, for harvest and extraction. However, rainfall has combined with the natural then the case for higher prices for orange the demand for bergamot remains high, reduction in crop size that is to be oil is less compelling. which is expected to continue to raise expected the year after a very big crop. For updates on orange pricing, prices. We welcome your inquiries. These circumstances suggest that the please contact us directly at info@ size of the orange crop will be down citrusandallied.com
04
[email protected] 410.273.9500 ROB’S CRYSTAL BALL
AN ESSENTIAL OILS MARKET REPORT
SUMMER 2020
BITTER CASSIA, NATURAL CARAWAY BENZALDEHYDE, ORANGE AND NATURAL CINNAMIC ALDEHYDE (OLD METHOD) Over the last 3 years, our suppliers have As stated in previous reports, caraway replanted bitter orange groves that continues to be a tricky market. Because As discussed in our 2019 Winter Market were severely damaged by greening. of the long production cycle, market Report, we believed that prices were It is hoped that this costly project will sentiment is oftentimes delayed. It is at historic lows and would start to firm yield a more sustainable supply. We highly recommended that you plan up. This is exactly what happened. have learned that many of the small ahead. Please inquire so that we can Needless to say, the repercussions and farmers are having more and more help you plan accordingly. aftermath of the United States & China trouble with disease and greening. This trade war are still in play. To recap, is one essential oil that we press for thus far, prices are at levels not seen in your annual requirements. A lack of CARDAMOM a decade. However, since the Chinese long-term planning can leave you short. New Year and COVID-19, prices have C&A distills five-fold bitter orange oil The past crop in Guatemala was rebounded from the lows. We feel it is along with a new product: bitter orange reported as the worst crop ever price- still an excellent time to contract for 6-12 essence oil. Please inquire. wise. The prices increased throughout months out. 2019 without subsiding. To make BLACK PEPPER matters worse, the crop was shorter than expected, which drove prices even CELERY SEED higher as demand for the raw spice The global black pepper markets are at grew from the Middle East and India. Celery has seen a smaller crop this very low levels, so we feel this is a good We have heard that the COVID-19 crisis year, which is unusual considering it time to cover your requirements since has hurt the spice demand (as petroleum is normally a steady crop. This year, the chance of prices rising is higher than oil future prices went under zero), the crop is reported to be 20% less the chance of it dropping. and prices are now softening to more due to demand for competing crops reasonable levels. However, a single and COVID-19 affected labor shortage weather issue or COVID-19 outbreak Therefore, the price of the oil has BORONIA in India or Guatemala can change this increased slightly. momentum in a matter of days. Insights from our 2019 Winter Market Report still hold today. Both supply CINNAMON and quality appear good. After years of LEAF shortages, larger volumes of boronia oil CARROT SEED should be coming to the market. The dynamics of the market for cinnamon leaf oil have completely Carrott seed oil’s availability is still changed. Oversupply and historic low BUCHU limited at the source. Please provide us prices caused buyers to purchase all of with your annual needs so we can source the available oil. Today, the supplies at enough quality material for you. source have dried up as the pandemic Buchu has greatly improved after has severely curtailed the supply. As a many years of major supply issues. At result, prices have jumped from their present, we are keeping our contracted lows in December – January. customers supplied. If you know your 2021 demands, please contact us with your volumes by late fall so we can do our best to secure your requirements.
05
[email protected] 410.273.9500 ROB’S CRYSTAL BALL
AN ESSENTIAL OILS MARKET REPORT
SUMMER 2020
CLARY SAGE DAVANA FENNEL
As stated in our 2019 Winter Market The 2019 inventory is all sold at source. The fennel crops look favorable. Please Report, supply of clary sage has risen Having visited davana growers for notify us of your 2021 requirements in to meet demand. Now that supply and over 2 decades, I can say this might the Fall as our business increases on this demand have appeared to slow, prices be a first! The February 2020 crop was product year after year. We invite your are trending downwards. very poor, and the new oil has a lower inquiries. davannone content. The total production could be down as much as 65%. Our recommendation is to book your needs CLOVE LEAF earlier than later as prices and supply GARLIC AND EUGENOL should get worse until the next crop.
The collection of leaves has been going Garlic may have one of the more well so far, with only moderate COVID-19 optimistic reports with an increase of related delays across the various regions approximately 20% in raw materials in Indonesia. However, the supply today DILL WEED compared to last year’s crop. However, is low based on active demand. Prices the impacts of COVID-19 on the are expected to firm as the Indonesian availability of labor remain to be seen. Rupiah is also appreciating, for a change, Last year’s North American yields were Our colleagues in China have reported in a relatively short time. less than expected, and Eastern Europe that the overall garlic market is weak, so experienced a short crop. Dillweed garlic oil prices should remain stable. prices remain steady as agricultural products have been sluggish. It must be CORIANDER pointed out that, unless we contract with HERB (CILANTRO) our dillweed growers, the supply could GERANIUM be seriously short. Therefore, please Prices for this competitive market have inform us of your needs by February continued to remain stable. Please so the dill seeds can be procured and The geranium crop is just beginning inquire to get up to date pricing. Our grown. C&A has scores of mint-farmer in the Yunnan Province in China. current prices continue to be less than relationships in the pacific northwest. According to reports, the typically good half of the long-term averages. Please contact us early. quality guaiadene content oil is not yet available. Buyers have remained patient with relatively stable prices, and in some cases lower prices. Since the Chinese EUCALYPTUS/ New Year, prices have lowered due to CUMIN SEED EUCALYPTOL lackluster demand. The Egyptian crop is in the fall, but thus far the supply is Insights from our 2019 Winter Market Prices dropped during the Chinese meeting the demand. It is also noted Report still hold true today. While prices New Year due to a lack of interest until that the Egyptian pound has been weak and output remain stable, it is imperative the pandemic which caused prices to vis-a-vis the US dollar. This is keeping to continue monitoring the turmoil in firm. The May-June crop, which is now the modest price down. C&A has good the major regions of production. C&A in process, should bolster the low volumes of both qualities to service your stocks high-quality cumin seed oil for inventories at source. needs. your needs.
06
[email protected] 410.273.9500 ROB’S CRYSTAL BALL
AN ESSENTIAL OILS MARKET REPORT
SUMMER 2020
MANDARIN GINGER LEMONGRASS PETITGRAIN
The price of ginger oil seems to be on Insights from our 2019 Winter Market After two or three years of unpredictable a rollercoaster. Recently, the price has Report still stand. C&A’s lemongrass is softening of prices, we now see the moved up, then down, up again, and sourced in Guatemala where the quality prices firming to more normal levels. We back down in almost quarterly intervals. is superb. Supply does not always keep welcome your inquiries. In addition to spikes in demand, a recent up with the demand for lemongrass for drought in China severely impacted many reasons. We continue to thank our yields. We suggest covering your needs long-term customers for their support, MINT now as prices are at low levels. C&A as they have enabled us to encourage works hard to keep a high-quality supply cultivation by Guatemalan suppliers. India’s mint harvesting in ongoing. on hand at competitive prices. Please Indian peppermint supply is limited contact us at [email protected]. LITSEA compared to 2019. On the other hand, CUBEBA demand is in question due to COVID-19. India’s lockdowns in April and May HO WOOD The availability at source has declined to affected shipments of material, but not (NATURAL LINALOOL) very low levels and prices are mounting, the planting and harvesting of mint. rapidly. The new crop is in August and Prices of Indian oils are approaching Prices are now coming off of very- September. We will provide updates in prices of US Peppermint prices. low-levels. We recommend covering the next Market Report. C&A’s position Production of US peppermint won’t take your needs now as prices are very as a domestic manufacturer enables place until August, although weather competitive. us to provide our customers with has so far cooperated with the season. consistent, high-quality products. Additionally, spearmint prices have
rebounded from recent lows. LAVENDER MANDARIN NEROLI After setting record highs in 2019, the C&A is mostly active in processing volume of lavender crop is projected to mandarin oil from Italy where the A successful 2020 crop just completed lower in 2020. A cold and rainy season production begins in the fall with green in Morocco and Tunisia. Over the past in Bulgaria may hurt this year’s yields. oil, advances to the production of yellow two years, we have often experienced The younger crop is expected to fare oil, and finally in January to red oil. This shortages. This season, we hope that better than the older stands which may past season, in Italy, the volumes of supply and demand are in balance. not even produce a crop. Although fruit for processing declined from 9,000 Please contact us for this beautiful supply is expected to fall this year, a metric tons in 2019 to 7,000 metric tons. essential oil. shortage is not guaranteed. We will keep The reduction in quantity caused the our customers informed in early August price to firm. However, the quality of the when the harvest is complete. oil was good. NUTMEG It is interesting to note that 10 years ago, As always, C&A maintains strategic the total Bulgarian crop was below 100 inventory of mandarin oil for our This beautiful spice oil seems to be tons. This year, we may “only” have 250 regular customers and is always looking stable as supply and demand are tons, which may not be enough to meet to expand our business with new currently in balance. C&A is well demand. This is demonstrative of how customers. positioned on excellent quality much the market has changed. nutmeg oils and terpeneless for your applications. Please inquire.
07
[email protected] 410.273.9500 ROB’S CRYSTAL BALL
AN ESSENTIAL OILS MARKET REPORT
SUMMER 2020
other natural flavors) to bridge the gap ONION until the new season. The season begins TEA TREE between July and August, and continues into the fall. Please contact us for After 7-8 years of stable prices, onion Tea tree production is down significantly oil prices have risen due to increased in 2020 as compared to 2019. Weather production costs that are caused by issues coupled with COVID-19 are behind environmental requirements. ROSEMARY this change. Demand remains strong for the product with no carryover projected. As stated in our 2019 Winter Market PALMA ROSA (NATURAL Report, high demand for rosemary’s GERANYL ACETATE) antioxidant properties have kept prices high. Please contact us to satisfy your Until recently, suitable palma rosa needs.. WINTERGREEN oil was in the hands of traders and distillers at source. Due to low prices and COVID-19, farmers did not distill The planting areas for wintergreen are more oil, and instead concentrated on SANDALWOOD in the Yunnan province of China. This alternate crops. If demand increases, year, even with low demand, the supply in China was sold out many months ago. the next peak crop time is in August. In This beautiful, aromatic oil from India The new harvest started in May, and recent weeks the price has increased, has seen stable prices due competing prices are expected to remain stable. albeit at low levels in our opinion. qualities from various sources. However, Please contact us to cover your yearly the supply of sandalwood has been requirements. PIMENTO severely hampered by COVID-19, so LEAF/BERRY please order 2-3 months into your lead times. Pimento oil caught Jamaican processors off guard as inventories dwindled partly due to excessively high interest TAGETES - rates, difficulty finding labor (which SOUTH AFRICA got much worse during the pandemic), and government restrictions on the Due to COVID-19, the supply of South collection of leaves and berries. This oil African tagetes is gravely low. Please is currently in crisis as demand grossly plan your purchases at least 4-5 months exceeds the supply. In the short term, ahead, if not more. C&A offers a WONF equivalent (with
QUESTIONS? WE’D LOVE TO HEAR FROM YOU! Contact Richie Pisano, Technical Account Executive [email protected] 410.273.9500
08
[email protected] 410.273.9500