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.