Essential oils market_report_0415.pdf

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SPRING 2015

MARKET REPORT SPRING 2015

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MARKET REPORT SPRING 2015

ARGENTINA Lemon Oil There is a growing anticipation regarding the crop in Argentina, which is only a couple of months away. It is expected that after a good crop the South Americans will put a lot of price pressure on European producers but it is perhaps more likely that they will try and align their prices rather than undercut prices. It will be interesting as there is little commitment from them at the moment but it’s almost guaranteed that we will see much more material in the market this year compared with last year. How in the end the oil price is impacted remains to be seen. Watch this space! ! Market prices USD 35.00 – 40.00 /kilo

AUSTRALIA Sandalwood Oil Indian We already know that production this year will be limited with only small volumes of new plantations to be harvested and processed. However, as reported in January, there are plans to introduce a major second supplier to the market from midyear. At the time of writing, these plans are still well on track. Both producers will have significant volumes of oil from around 2016 and this will in turn give security of supply for those wishing to write Indian Sandalwood back into their formulations. Oil quality will be much improved and long-term sustainability will be assured. Over recent weeks prices have fallen as the current single producer aligned their prices to the market after failing to introduce the product into the fragrance industry at higher price levels. It is likely that following the introduction of new processors during the year, prices could stabilise around this level if not lower. ! Market prices AUD 2,500-2,800 /kilo

Sandalwood Oil Queensland It is worth reiterating our earlier reports, as this quality remains a viable alternative to those seeking lower prices yet good performing sandalwood in their fragrances. New production continues to grow modestly and the supply chain is well supported by the Queensland Government at all levels from production through to distillation. Volumes can be increased in line with demand. ! Market prices AUD 1,100-1,200 /kilo

Sandalwood Oil West Australian Short-term wood supply remains under tight control with limited options for those outside the current Government’s distribution chain but we have already reported that this will change for the better soon. New plantation wood is still on schedule to be harvested and processed with oil hitting the markets in the third quarter this year. There are significant plantations held by a number of private management companies, which will improve the supply of wood to processors later in the year. Also be wary of African Sandalwood being sold as West Australian or blended into West Australian material. We have seen evidence of this in Europe being supplied from Australia. One way to check quickly is to see the level of farnesol, which is only found in WA Sandalwood and should be at least 5%. ! Market prices AUD 1,700-1,900 /kilo

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MARKET REPORT SPRING 2015

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Tea Tree Oil Markets are stable at present with little (or no) production during the first quarter. This is typical for a product where harvesting begins around May through until November. At this stage it appears that Australia will produce around 500 MT in 2015, which should meet market demand. That said, we are aware of a number of new applications in Europe which may in turn lead to an increased demand during the second half of 2015 and into 2016. Furthermore, a number of farmers have already been reported to have made commitments for the new season for a large volume of oil. Positively a number of farmers have been investing in new plantations, which aim to increase the production by 5-10% in 2016. ! Market prices AUD 47.00 /kilo

BRAZIL Lime Oil Tahiti (Persian) CP Earlier fears that localised droughts had impacted the crops appear unfounded and in fact there is a reportedly good crop. Material is coming online and giving some extra competition to Mexico. ! Market prices USD 40.00+ /kilo

Orange Oil Over committed producers, low aldehydes and rising price continue to be the general theme from Brazil on orange oil. According to USDA statistics, the Brazilian crop is down 3% with others at origin suggesting slightly higher figures. There is no doubt that as a result the number of oranges available for processing will fall significantly keeping availability tight and prices firm. After a failed first bloom this coming year’s crop is expected to reduce by around 20%, significantly cutting the supply of oranges to the processing market. This would suggest that given the current troubles in supply, the problem is likely to last throughout 2015 and into 2016. ! Market prices USD 7.50+ /kilo

GLOBAL PICTURE – TANGERINE Global production is forecast to be at record levels at around 27 million tons, an increase of 0.7 million with China’s increase offsetting the reduced crop in Morocco. Despite varying trends from around the world, overall demand continues to grow almost in line with the increase of supply.

BULGARIA Lavender At this time of year across Eastern Europe the most we can do is ask ourselves if we survived the winter. In the case of lavender it appears so, although in Bulgaria it is not too unusual to get a late frost so we cannot say yet for certain if we survived. However, the early signs look positive and some farmers are still anticipating a small increase in production this year after last year’s disaster. This will not be realised until harvesting begin, as the few weeks prior to harvesting are the most important.

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There are limited stocks available in the market but nothing it seems at origin. Many farmers are reported to have pre-sold some significant volumes of new season material as most buyers / end-users plan ahead to ensure they have sufficient cover should there be any repeat of last year’s crop shortages. It has been mooted by some that harvesting could be a little later than usual but this appears to be a little premature at this stage and is more likely to be an attempt by some to keep market prices higher. ! Market prices USD 105-110 /kilo

Rose Oil Markets are off-season and stable with a little supply still available at origin. More information will become available around May as the season nears. ! Market prices Euro 6,750-7,000 /kilo

CHINA Cassia Oil (Traditional distillation) The market has fallen into a quiet spell and prices have reflected this. There is not much material in the market today with new crop set to come online towards late May. With prices slipping 5-7% over the past few weeks, today represents a good time to take a position. ! Market prices USD 36-38 /kilo

Citronella Oil Supply has again become short as overall production falls due to a lack of interest by farmers because of a weakening price. Material can be found but any large demand puts immediate pressure on supply. Prices are a little volatile. ! Market prices USD 17.00-18.00 /kilo

Eucalyptus Oil Markets appear stable although you feel that this could change at any minute. The question is in what way? After some shortages at times last year, 2014 was not a bad year with production at around 9,000 MT; yet more unstable production cycles and market demands created a volatile year for eucalyptus oil. Since the turn of the year, production has increased slightly and generally global demand is weak. This could stop farmers producing in the short term, which could again put a strain on supply and prices should market demand return. ! Market prices USD 12.00 /kilo

Garlic Oil Markets seem stable after the Chinese New Year despite pressure from farmers to increase raw material prices. Inflation, labour and general production costs rises continue to put pressure on this product and with tighter controls on distillation (due to the odour) enforced by the government, it is expected that during the course of 2015, production will be smaller and prices higher. ! Market prices USD 130.00 /kilo

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Geranium Oil Limited supplies at origin continue to put pressures on price with the next season still several months away. Any extra market demand could push prices higher but it appears more likely that the market will wait until May’s harvest in anticipation of much improved availability and pricing. ! Market prices USD 180+ /kilo

Ginger Oil It is a similar story to that reported in January 2015 and November 2014 as local fresh ginger prices continue to remain firm. There appears little or no end to the increasing costs in China with some products more affected than others. In the case of ginger oil it is hard to see any improvement in price in the near future. ! Market prices USD 75.00 /kilo

Lavender Oil It is still assumed that crops this year cannot return to full yields after the damage to plantations last season. Having said that, it is too early to get a positive or negative feel to how much the plants may have recovered having survived the winter season. It is hoped that no late frosts coupled with other favourable conditions may restore some of last year’s lost volumes once harvest begins in July. ! Market prices USD 95.00 /kilo

Litsea Cubeba Oil Prices remain firm after poor 2014 crops and with the next harvest many months away it is expected that prices will remain firm until Q3. ! Market prices USD 22.00 /kilo

Tea Tree Oil Unofficial statistics suggest that Chinese production significantly increased during 2014 but we all know that the qualities from this area can be very mixed. Ascertaining exactly what type of oil has increased in production is almost impossible but there is no doubt that the market is consuming more. Generally the global tea tree market continues to increase and with Australia’s production very static, China can take full advantage of any increased volumes from the market. ! Market prices USD 23.00-25.00 /kilo “Did you know you can see a video of our facilities by visiting our Google+ Home Page?”

CROATIA Helichrysum Oil In January we highlighted the ongoing issues in Croatia with regard to illegal harvesting of helichrysum and the proposed controls the government may introduce to curb this problem. We have now heard that only the summer crop will be allowed to be harvested, which is likely to put additional pressure on supply and in turn keep prices firm. We expect the July crop to be booked in advance so the message for this oil is to plan ahead as the reality of these imposed controls could be more damaging that expected at this stage. ! Market prices N/A

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EGYPT Basil Oil Linalool (Sweet Basil) Continuing availability issues prevail with desirable quality material hard to find. As a result, prices remain firm and are expected to remain so until the next harvest, although it is not expected to provide a great relief even after this time. ! Market prices USD 130+ /kilo

Blue Chamomile The season started during March and the first exports from Egypt will be made late March / early April. At the time of publication it was unclear how good the crop size would be, but early indications were positive. ! Market prices USD 1,300+ /kilo

Coriander Herb Oil There was a small production in February, which has added some extra volumes to the market. Demand is fairly weak as there was a carryover of material from last year and as a result prices have softened slightly. ! Market prices USD 75.00-80.00 /kilo

Cumin Seed Oil Prices remain stable today despite rumours of some limited output from the upcoming crops. If this is the case, today’s prices seem favourable. ! Market prices USD 100.00 /kilo

Geranium Oil Prices have been stable for a couple of weeks but since the turn of the year have increased. Demand remains flat and there are plenty of stocks available but as we know this is not always a simple supply and demand affected product! Next production is not too far away in May so it is anticipated that prices will weaken over the coming weeks. ! Market prices USD 85.00-90.00 /kilo

Jasmine Limited volumes are available but the market seems to be waiting for fresh production in a few months time. 2014 saw a bad crop both in terms of quality and quantity but as a result of the under supply and higher prices more farmers have been encouraged to increase crop production. As a result, we could see an extra 20% of flowers available in 2015 and much more in subsequent years. Hopefully this will contribute to a better supply and demand balance and allow prices to return to a more workable and sustainable level. ! Market prices USD 3,900-4,000 /kilo (Concrete)

Neroli Oil Production started in March and the market is waiting for news of the output along with new prices. ! Market prices N/A

Parsley Herb Oil No fresh availability until June with most market volumes pre-planned into the limited production time available to crop and process this product. Start thinking about your next 12 months requirements soon. ! Market prices N/A

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FRANCE Clary Sage Oil 2014 volumes were calculated to be around 8 MT and with some small expansion it is hoped that with good conditions this year’s production may be around 10 MT. Much of this is already committed to regular buyers who have been requesting extra volumes in line with their organic growth in using this raw material. As the market is well balanced for this product we anticipate price levels remaining at 2014 levels. We must remember that clary sage from France is not generally impacted by what happens in other growing areas, as it is perceived as a different quality. It is an expensive product to produce and as such only at attractive price levels will farmers be encouraged to continue to invest in this product. Today there are limited volumes available and as such prices are trading at high levels. ! Market prices Euro 200 +/- /kilo

Lavandin Grosso No change from our last report as we are very much off-season at the moment. Thankfully, the plantations survived the winter elements and there is optimism for a good, healthy crop later in the year. Until then, markets remain firm with very limited volumes available. Super, Abrilais and Sumian remain unavailable. ! Market prices Euro 31.00 /kilo

Lavender Oil (Maillette) There is some way to go before we can start to even assess this year’s crops but the market remains in search of any good quality oil with buyers willing to pay if available. In 2014 there was an unprecedented large demand for all lavender oils in Q2 and anything close to that again this year could see the markets go crazy. With no carryover stocks and 4-5 months before we see fresh oil, the markets are delicately balanced. ! Market prices Euro 130.00+ /kilo

INDIA Black Pepper Oil After a good production season in February, prices weakened but have since stabilised around the USD 100 /kilo level. This should give a period of stability at a price most are happy with. ! Market prices USD 100.00 +/- /kilo

Lemongrass Oil There are still limited volumes of pure material available with perhaps an increasing amount of exported lemongrass already seeing the benefit of synthetic citral added. Blending in citral can make a USD 2+ /kilo difference to the price you see so be sure it is not just a good price you are getting, but also still pure material. ! Market prices USD 17.00 /kilo

Lime Oil Distilled (Key Limes) Modest production of Indian lime oil has commenced which is similar in profile and characteristics to that of Mexican origin. Capacities will increase in stages over the next few years with today’s capacity around 7080MT. A good one to get through your QC and into NPD for future options! ! Market prices USD 50.00 /kilo

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Mentha Arvensis (Cornmint) The conditions remain as reported in January. A full assessment of the conditions of the plantations will be made mid-April. Following significant changes in recent years for the demand for Indian mentha arvensis (due to synthetic alternatives) planting in 2014 was estimated to be around 10% less than usual. However, good conditions resulted in a similar harvest to 2013 of around 40,000 MT. The demand has been expectedly less, so there will be a supply carryover in the region of 20% of the 2014 crop ensuring prices stay weak. It is anticipated that in 2015 less planting will take place as Indian producers seek a better supply and demand balance to make this a viable product for them to continue to produce. ! Market prices USD 12.00 – 12.50 /kilo

Mentha Piperita Oil (Peppermint) The 2014 crop was comparable with previous years at around 650 MT. However demand has remained low and carryover stock is inevitable. Prices remain weak as Indian producers try to readjust their future output expectations inline with demand patterns. ! Market prices USD 26.00 – 28.00 /kilo “Did you know that China is India’s largest export client for all mints? Over the past 2 years China has contributed for over 50% of the exported volumes. The USA is second around 20%” (Data: www.Zauba.com) The Ultra Team were in the Indian Mint Regions in March looking at the new plantations. See our Google+ account for more details!

Mentha Spicata (Spearmint) In 2014 production increased by 40% on the previous year to reach 325 MT. Demand has been strong and business is happy at these levels. Extra efforts have been made this year to plant more spearmint. The benefits of this should be seen around June once the first harvest takes place. ! Market prices USD 19.00 – 20.00 /kilo

ULTRA’S TECHNICAL EXPERTISE We could not pride ourselves on supplying the best essential oils without the capacity to support this statement with some excellent technical support. Ultra BV is proud to have our Technical Team at our New Delhi Creative Centre supporting our internal QC procedures. Our team, led by Bhuvana Nageshwaran who has over 26 years experience, is accompanied by other scientists, perfumers and flavourists, supported with some of the best state-of-the-art equipment currently available. Ultra International is ISO 9001, ISO 14001 & GMP and will soon achieve NABL. ‘National Accreditation Board for Testing and Calibration Laboratories (NABL) is an autonomous body under the aegis of Department of Science & Technology, Government of India. NABL has been established with the objective of providing Government, Regulators and Industry with a scheme of laboratory accreditation through third-party assessment for formally recognising the technical competence of laboratories. The accreditation services are provided for testing, calibration and medical laboratories in accordance with International Organization for Standardization (ISO) Standards.’

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SANGANERIA FOUNDATION FOR HEALTH AND EDUCATION

ABOUT US Established in 2003 the Sanganeria Foundation for Health and Education (SFHE) is a non-profit organisation that has been working for more than a decade towards making an institutional impact in the field of health and education in India. The Foundation’s efforts focus on rural programmes that foster high-quality education and childhood health and improve economic stability among India’s rural poor. Our goals in India are to seek immediate positive impact on the lives of individual children we work with, and to be a catalyst for systemic change. To these ends, we partner with various other Foundations, NGOs, Community Organisations and other Philanthropists. We actively consult with all our partners, helping them to solve problems, assess performance and plan for the future. All development work the Foundation initiates and conducts in India is mainly focused on building the capacity and ability of children from under-privileged communities. The wellbeing of children includes ensuring children have access to education, health, protection and participation. The Foundation focuses mainly on the rural population in Delhi/NCR, but there is also a special focus on efforts in Rajasthan, Maharashtra and Uttarakhand. You will find below and on our website more details of the projects the Foundation is involved with along with many illuminating success stories which we are proud to share.

CORE PROGRAMMES SFHE works with some of the most vulnerable and relegated communities across India, with the goal of integrating them and their residents into mainstream society. The Foundation focuses its efforts on the following programmes, each having their own clear mandate:

Rural Transformation SFHE is committed to improving livelihoods in rural India through comprehensive processes and knowledge empowerment.

Health & Education Committed to the vision of ‘Health & Education for the poor’, the Foundation has launched various educational programmes focusing on the vulnerable sections of the society. SFHE also provides medical aid to the poor, needy and destitute people.

Women Empowerment SFHE focuses on women empowerment through education. The educational achievements of women can have ripple effects within the family, community, spanning future generations. Investing in girls' education is one of the most effective ways to reduce poverty. Hence, education is crucial for the empowerment and emancipation of girls and women, and the realisation of all other human rights. Educating a girl has a transformational effect that changes communities and societies as a whole.

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EDUCATION Through sponsorship and involvement SFHE supports a number of schools and education programmes in regional communities. Providing financial assistance SFHE supports the following:

http://www.gatewayschoolmumbai.org http://www.apsthanabhawan.com

Gateway School of Mumbai Arpan Chikitsa Shiksha Humana ‘People to People’ World Vision India Jaiswal Children Public School Shree Raghunath Balika Vidyalaya Purkal Youth Development Society

http://shikshatrust.org! http://www.humana.org http://www.worldvision.in http://www.purkal.org/in/

Additionally SFHE supports “Essential Oil Association of India” towards Education and Training to the Students for Research & Development and Quality Control. Scholarships and Awards (SFHE Awards) are presented to talented students from a number of schools to encourage and support their on-going education in different fields. They can be categorised as follows: Radha Devi Prahlad Rai Sanganeria Scholarship th th th th For students of class 9 , 10 , 11 , and 12 who have obtained minimum 60% marks in the previous class and whose parents’ monthly income is less than Rs.2,000/Radha Devi Prahlad Rai Sanganeria Merit Award th For students who secure minimum 80% marks in Board Exam of 8th and 10th Class and 70% marks of 12 . Radha Devi Prahlad Rai Sanganeria Award for Best Student For outstanding performance in Games/Sports, Debates/Essays, Cultural Activities, Scouts/Guides and Fine Arts.

The SANGANERIA FOUNDATION FOR EDUCATION is proud to support PYDS.

HEALTH

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SFHE commenced its support to the Purkal Youth Development Society (PYDS) in the year 2011. The children are supported with excellent classroom learning materials, field trips, health cover, transportation and nutrition (4 feeds a day). The Director of PYDS was quoted as saying “These students have grown well and have transformed into young leaders of tomorrow”. He went on to say “We have been able to accomplish this only due to the continuous support from the Sanganeria Foundation”. He referenced a number of individuals who have been supported by SFHE: “One scholar is currently in the USA for a year as an exchange student” “Another girl, went to China to attend a school there for 6 months” “A student from the same group secured the first rank in the whole of Uttarakhand in a quiz competition conducted by Chinmaya Mission. She later represented the State in a national quiz competition conducted at Pune.” “Other students are regular participants in competitions at Interschool and Interstate levels” This group of students will graduate in June 2016 after completing their final board examinations.

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INDONESIA Cananga Oil Raw material supplies have improved recently and with a steady demand from the market everything seems in better balance. ! Market prices USD 57.00 /kilo

Citronella Oil Currently there is a relatively good balance in supply and demand levels after some recovery in supply over the past couple of months. With Chinese supplies still not consistent and with the weakening local currency against the US Dollar, Indonesia citronella remains a good buy in today’s marketplace. ! Market prices USD 16.00+ /kilo

Clove Oil Prices are steady and in late February reduced but mainly due to exchange rate changes rather than raw material costs. The exchange rates are ensuring that export prices change weekly so it is thought that the strengthening US Dollar can only keep pushing prices down a little. Fresh raw material will come on stream in May so it is not anticipated that prices will rise in the near future – just keep an eye on that exchange rate! ! Market prices USD Leaf 85% Rect. 15.25 USD /kilo | Bud USD 23 /kilo | Leaf Crude 73-82% 12.014.50 /kilo | Stem USD 16.50 /kilo | Eugenol USD 16.95-17.50 /kilo “Did you know that P.T. Van Aroma are 10 years young this year and are currently undergoing another expansion? More new products are coming soon!” Please visit our new website www.vanaroma.com

Massoia Bark Oil A similar story to recent months in that stocks of massoia have been hard to come by, especially the high lactone material oil. Demand is strong, but prices remain stable. ! Market prices USD 350 - 750 /kilo (C10 50%-95%)

Nutmeg Oil Prices continued to fall over recent weeks due to the large impact of supplies from newer plantations. However, there is already some discontent by some farmers/collectors at these new price levels. At what price point it becomes undesirable to collect and process is the subject of many discussions at the moment and we have seen large variations in opinions. It is very important to continue to be vigilant on quality as some grades of material are not comparable to historical standards. No doubt there will be good savings for end users into the future but there are possibly a few more twists on this one over the next few months before we see a stable market. ! Market prices USD 55.00 – 75.00 /kilo

Patchouli Oil There is a little confusion in the market at the moment and it is understandable. In recent years the margin of difference between Sulawesi and Sumatra material has been marginal but as the dynamics of these two origins develop at a different pace the price differential is growing.

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To remind everyone, the shift to Sulawesi as the major producing area is yielding lower PA (patchouli alcohol) and higher acid material. The amount of raw material available is growing and as a result prices are weakening. This is in contrast to Sumatra where it remains difficult to buy good quality material and prices remain high. As a standard, 100% Sulawesi material is not suitable for the fragrance industry so there is always some mix of each origin in the standard export grades. Using a sliding scale you can see if you are happy with almost 100% Sulawesi material and you can expect to pay less as supplies improve. However, the more discerning end user will continue to face a balance between quality and price expectations. We feel it is prudent at this time to explain in more detail the shift in Indonesian patchouli production and this is explained more in our Elementary Essential Oils section at the end of this Market Report, which is an excerpt from our published article in January’s Perfumer & Flavorist magazine. ! Market prices USD 40.00-70.00 /kilo

Vetiver Oil The weak local currency has hidden the real impact of what is becoming a difficult supply situation in Indonesia. Raw materials are scarce and prices have increased significantly over the past 12 months. This is expected to continue in the short term. ! Market prices USD 165.00-210.00 /kilo (Crude|Rect|MD)

ITALY Lemon Oil The Italians have led the way to date on lowering market prices for lemon oil but it is not been such an easy ride and one that may soon pose a few extra challenges. Processors have been anxiously awaiting the harvesting of more lemons but conditions have not been good enough. Too much rain has had a significant influence on the fruits available. As a result, fresh fruit prices have risen significantly over recent weeks, although a lack of lemons for processing has not yet directly resulted in large oil price increases. There is a delicate balance at the moment despite a weak market. If demand increases and adds more pressure to the supply chain then prices could rise quickly. ! Market prices Euro 36.00-38.00 /kilo

Orange Oil Blood Due to the rains fresh fruits are not getting to the processors and as a result prices have started to increase. Some processors anticipate the crop volume to be 40% lower than at the same period last year. ! Market prices Euro 6.00 /kilo

GLOBAL PICTURE - ORANGE Global forecasts are expected to be down around 4% on the previous year to 48.8 million metric tonnes. This is due to a loss of yields across the EU, South America and China. As a result, fruits for processing may be down as much as 7% globally.

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MEXICO Lime Oil Distilled (Key Limes) Prices have increased slightly over recent weeks after what had been a flat period of market activity earlier in the year. Good quality material is particularly difficult to secure as stocks start to diminish as we await the next season Competition from other countries has eased the overall market supply situation but there is no over supply and it is thought the markets are well balanced now and will stay at these price levels for some time. ! Market prices USD 47.00-49.00 /kilo “Did you know Mexico is the second largest producer of limes in the world, behind India? However Mexico processes more fruits for oil making it the largest oil producer.”

NEPAL Basil Oil Linalool (Organic) No availability at present and production from the next harvest is not expected until August. It is important to plan ahead as there is usually very little surplus material available after production since most is pre-sold. ! Market prices USD N/A

Chamomile Oil (Organic) Production is almost complete after the winter harvest, but it expected to be down around 20-25% due to unfavourable weather conditions. Total output from the Terai Regions should be in the area of 400 kilos. Prices are expected to remain stable despite the lower output. ! Market prices USD 600 /kilo

PARAGUAY Cabreuva Oil No recent production over the local summer months and as a result conditions remain unchanged from that last reported. Shortages remain; demands and prices are firm. ! Market prices USD 45.00 /kilo

Guaiacwood Oil Prices remain firm as global demand increases. Low summer production has pushed prices up in some regions but generally the market remains stable. Production will increase again over the next months. ! Market prices USD 24.00 /kilo

Petitgrain Oil The outlook for petitgrain remains poor over the short term. Following the summer months of low production the supply situation has worsened leaving demand very firm. The handful of processors all say the same: that it will take some time for the market to rebalance and at what price levels remains to be seen. ! Market prices USD 63.00 – 65.00 / kilo

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“Did you know that Paraguay is one of only two landlocked countries in South America (Bolivia the other) making exports lengthy and costly?”

RUSSIA It is currently off-season for most Russian products and to date an uneventful winter period means that there has been no obvious damage to any crops. Having said that it has been known in recent years for late colds to damage crops well into spring after plants/flowers start to grow. Of course, we are all hoping that this will not be the case this year.

Clary Sage Oil There are limited supplies in the market with none known to be at origin. Prices remain firm and will do so for several months until estimates start to take place over the condition of the next crop. 2014 production was down an estimated 20% leaving no carryover in a global market, which has seen total production diminish significantly in recent years. ! Market prices USD 170.00 /kilo

Coriander Herb Oil This will be the first harvest in the summer season for Russian products usually starting in June. Today there are some stocks remaining in the market, which is untypical of recent years. Unfortunately the product has a limited shelf life so it is unlikely to impact the demand pattern for new season material. However, it is thought that this surplus material could help keep prices lower than last season. ! Market prices USD 95.00 /kilo

Coriander Seed Oil New season material is still many months away (August/September) and there continues to be steady demand in a very firm market. This is keeping prices high for the moment for spot purchases and is likely to remain so for several months. Forecasting the future of this product is a little difficult as we expect to see much-improved crops this year with perhaps more raw material available for processing. Having said that we have learnt from a number of farmers that they have pre-committed a significant percentage of their expected crops already to those who are willing to pre-pay and secure stocks early. It is expected that over the coming weeks any material available in the market will dry-up, which will in turn keep the pressure on price as we await more information about this year’s crop. One thing is certain, namely that anything impacting potential supply, including oil yields or political circumstances will have a detrimental impact, as the market remains finely balanced. ! Market prices USD 140.00 + /kilo

Lavender Oil There are reportedly some small stocks available at origin but we are now mainly focused on what the supply will be from July’s harvest. There is perhaps less pressure on Russia this year than in the past as expectations from the market are low after several years of poor yields. Instead the market will look to see how Bulgaria recovers after a poor 2014 harvest, which will have more of an impact on global supply. It is estimated that Russia accounts for less than 5% of the global market. ! Market prices USD 100.00 /kilo

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We should not forget that a major producing region for essential oils in ‘Russia’ is Crimea and at this time sanctions from Europe and the USA remain in place with regards to supplies from this region. The sanctions also cover insurance and financing and will remain in place for the foreseeable future. Producers in the region continue to find creative means to counteract these sanctions but they are short term and remain vulnerable to further changes or scrutiny from officials as producers seek to maintain or navigate a path around the sanctions. Pre-financing and warehousing goods from Crimea is still problematic for EU-based businesses and this needs to be carefully considered before initiating business with companies in the area. With these sanctions come great risks and high vulnerability for anyone looking to pre-finance products for 2015 production. Based on historical figures Crimea produces around 20-25% of Russia’s coriander seed oil (for example). Any problems with supply from this area will have a detrimental effect on the overall supply from Russia and the global markets.

SOUTH AFRICA Eucalyptus Radiata oil Hopes of improved yields in 2015 were hit a major blow over the last couple of months by the lack of rainfall leading to lower expectations. A February harvest never happened, as yields were too low to process. Now it will be Q3 before the major plantations are harvested, thus leaving supply extremely short. At present it is predicted that supply in 2015 could be as much as 20% below 2014, all this in a year when new plantations were hoped to have given us some relief in supply. ! Market prices USD 35.00 /kilo

Lemon Oil As always with the South Africans they believe 2015 production will be higher than last, or at least in-line with their continuous organic growth in recent years. At present, there is no production (seasonal) but this will start again in June with more significant volumes available from August. ! Market prices USD 30.00 + /kilo

Orange Oil Stocks are very depleted after late demands, probably as a result of poor output, dire forecasts and higher prices from other growing regions. The season will commence again in June and last until late October. ! Market prices USD 6.50 /kilo

Tagette Oil Late rains in 2014 are expected to impact this year’s output significantly. Some early production has taken place and over the next few weeks we should learn the extent of the damage caused by the late rains. ! Market prices N/A

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Tea Tree Oil 2014 supply was inline with expectations and supply remains at comfortable levels. A large proportion of South African material is organic and newer plantations are an improvement on traditional qualities. ! Market prices USD 45.00 /kilo

SPAIN Lavandin Grosso Demand remains extremely high with prices climbing once again over the past few weeks. The impact of last year’s poor crops is still crippling the market with farmers struggling to keep up with demand. ! Market prices N/A

Lemon Oil Fresh fruit prices continue to hamper efforts by the Spanish processors to compete in the market. They have been under significant pressure from the Italians since late last year and with the nearing harvests from Argentina there are some producers fearing they will not sell their oil at the price levels they had expected. Supply is good (an increase of fresh lemons of 18%) and it is certainly a buyers’ market at the moment, the only question being how much buyers want to commit at what appears to be higher than expected prices. It was thought a number of months ago that prices would have eased but this has not happened to the extent that many end users had hoped. ! Market prices Euro 30.00 /kilo

Thyme Oil Red Markets are short after last year’s devastating crop. Harvests will begin again in June/July. Today any material available is being traded at significantly inflated levels although it is hard to see what levels we can expect in Q3 given the market demand leading into next season. ! Market prices Euro 120.00 /kilo

GLOBAL PICTURE - LEMON For 2014/15, global production is forecast 9% higher at 6.7 million metric tons, on favourable weather in the EU and Argentina and the recuperation of trees that had been affected by frost the previous year in Argentina. Global exports are forecast up slightly on increases in Argentina and the EU. Fruit for processing is up nearly 25% as Argentina has more available supplies. Source: USDA January 2015

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USA Grapefruit Oil Florida The most recent statistics from the USDA suggest no changes from those earlier forecasts of 15.0 million boxes. Around 58% of coloured grapefruit has been harvested and around 39% of white grapefruit. Prices remain firm but stable after some increases at the turn of the year. ! Market prices USD 27.50 – 29.00 /kilo (White) USD 17.50 -18.50 /kilo (Coloured)

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Orange Oil Florida Revised USDA statistics have put orange production down several times after reassessing the crop conditions in recent weeks. Initial forecasts of 108 million boxes are now at 102 million boxes, around a 5% reduction in output. Valencia output is at 55 million boxes and non-Valencia 47 million boxes. Adding to the problems is the low aldehyde content, which on average is under 1% and as low as 0.8% from some batches. This sort of low aldehyde level is extremely rare. As a result prices are firming along with other origins. Expect an interesting year for orange oil! Can we see USD 8.00 /kilo in the coming months? Many believe it is inevitable. ! Market prices USD 7.50+ /kilo

ULTRA – KEEPING YOU INFORMED!

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Indonesian Patchouli Supply Migration Why is the patchouli market symbolic of the unusual cyclical trends in pricing we face in our industry? It appears that there’s never a dull moment when it comes to this product. As a key raw material in the perfumery world it is one product where every buyer needs to take extra care when planning and fixing prices for future formulation costs. So in exploring some of the dynamics surrounding the supply of patchouli we may uncover some details that will help us understand these frequent movements in price, quality and availability. Indonesia is the world’s largest producer of patchouli, accounting for over 80% of the global market. Patchouli is a perennial species that thrives in warm tropical climates. Current annual production volumes are around 1,000-1,200MT with market demand calculated to be around the same. Historically we have associated Java and Sumatra as the key growing regions for this oil but today this is no longer the case and in fact is one of the contributing factors to current availability and quality issues. Not so many years ago Java and Sumatra would have contributed around 90% of the raw materials used to make each kilo of patchouli oil but today the two regions represent only 20% with Sulawesi now being the primary growing region. This evolution has happened in a relatively short period of time. At the turn of the Millennium and until 2005, 100% of patchouli leaves would have come from Sumatra in the West of Indonesia. In just a few short years, by 2005, Sumatra was only responsible for 20% of all harvests with Java now accounting for 80%. Again this pattern lasted around 5 years and since 2010 until now the balance shift has moved to Sulawesi with almost no raw materials coming from Java. There is a good reason for this evolution and one we should note will re-occur over time. Patchouli crops cannot be grown on the same patch of land for long periods as certain components and nutrients in the soil, which the plant needs, are depleted over time. Over a five-year period what was once a good growing area will become a bad one so plantations need to be moved to different areas and often to different islands. Over the past 15 years Java and Sumatra have delivered good quality materials that

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! yielded oils with low acid and high patchouli alcohol (PA) content. Unfortunately, this time the ecological shift has left us with the major producing island (Sulawesi) providing us with below typical standard oil due to high acid values and low PA levels. This is why today we are experiencing quality issues.

The simple chart illustrates the wide differences in PA and acid values from each growing region over the past 15 years. Sulawesi plantations have been established in flatlands close to the sea, where the soil is naturally more acidic but patchouli best grows on hill slopes at around 400600 meters above sea level. This improves the chances of good rainfall which patchouli requires. The pressure on Sulawesi, given the market demands, has meant that farmers have resorted to harvesting younger plants, which typically mean lower PA and higher acid values. Over the past year, more plantations have been created to try and provide a better platform for growing patchouli in Sulawesi. It is hoped that these can be allowed to mature longer to improve the overall qualities from this region. That said, whilst the market continues to consume these inferior qualities, there is little encouragement for farmers to stop harvesting under the same conditions. It’s hard to see the winner here – nature or the market, as it seems to be neither. The lack of forward thinking by growers along with the nature of market demands have created today’s problems, from which it will be hard to recover, certainly in the short term. So what constitutes a good soil? For patchouli the pH needs to range from 5.5 to 7.5, then patchouli plants require a deep, well-drained, fertile, deep loamy soil, rich in humus and nutrients. It is possible that in time the soil will replenish the nutrients needed to re-establish plantations in the same area but attempts after 5 years were unsuccessful. There is no research to establish when past growing areas can return to patchouli production but it seems that anything less than 10 years simply will not work. There are differences in the odour profile of patchouli oil from different islands. Odour is always subjective and a constant battle between buyers and their internal QC teams but an understanding of how nature can change may help convince perfumers and evaluators that sometimes internal standards also need to be updated. If your company set internal specifications before 2005 you may be finding it hard to meet the odour characteristics with today’s fresh batches of patchouli oil. Remember the first rule when it comes to odour, which is patchouli, gets better with age! This is key because as the product matures the odour gets more round and loses some of those harsher green notes. You can achieve this through a simple process of aerating to start the oxidation process. Sometimes this ‘ageing’ is done at origin before sampling. However, when you review the patchouli odour profiles of the different Indonesian regions, you can see that there is a variance between the Sumatra quality and those from Sulawesi and Java. Sulawesi: Java: Sumatra:

Green. Leafy, Woody Green, Leafy, Woody Woody, Musky, Balsamic

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As there is currently little material coming from Sumatra replicating this profile can be difficult. As we have already pointed out this area also yields lower acid and high patchouli alcohol levels making this quality not only a difficult option to source, but also the most expensive one! So we are knee deep into this current cycle where we rely more on Sulawesi and plans are afoot to create newer plantations in ‘virgin’ areas within Sulawesi but where will be the next region of Indonesia to provide us with this wonderful plant? Who is investigating and investing in this? Will time allow plantations to move back to Java and Sumatra – maybe? As you can see this process never changes and as such will always create times of difficulty and other periods of consistency. The problem for our industry is that we cannot be certain as to what will be next. With supply and demand fairly balanced each year any interruptions in supply or spikes in demand can disrupt the market for a matter of weeks or months depending on the variance swing. 2014 was a typical example of where all these aspects came into play. The year started reasonably stable but supplies slowed and quality drops mid way into the year caused prices to spike. This spike continued for several months and only settled but at higher levels in the third quarter. The year ended with a slightly better balance in supply and demand but prices remained firm, especially for those seeking a higher quality material. The outlook for 2015/16 is that supplies should remain stable but this can always change quickly. If market prices remain fair there is a better balance. If prices rise then farmers plant more, possibly creating over-supply and making prices crash. This is a factor for many naturals in our markets and reminds us all that stability is always better than too many highs and lows. Keeping all this in mind helps us appreciate that this is not a simple product to start predicting its future and that no matter how big or small your demands are, planning ahead to ensure you have the right quality and quantity is an important and strategic decision for your business. Source: Perfumer & Flavorist Magazine January Edition ‘Natural Product Supply Bulletin’, written by Jonpaul Howarth

The SANGANERIA FOUNDATION FOR HEALTH & EDUCATION is proud to support SHIKSHA. S HIKSHA, founded in 2002, provides free education and vocational training to underprivileged children and youth in Delhi NCR. It trains students in the skills required to put them on the right track for employment and provides an enabling environment to bring out the best in them. SHIKSHA receives no aid from the Central/State Government. SHIKSHA operates three Educational Centres that follow the CBSE curriculum and cater for over 1,000 students, besides conducting adult literacy and conversational English courses in Delhi NCR. In addition to a completely free education it provides students with free uniforms, books, reading materials, and a mid-day meal. SHIKSHA gives scholarships to their best students, upon passing Class VII, so as to enable them to complete their education through the national educational system on an equal footing with their peers. SHIKSHA also holds free vocational training courses in Delhi NCR, including for sewing, beautician training, and for acquiring computer skills.

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