citrus and allied essences · 2014 was a year we will not easily forget as it regarded lemon. but...

March 2015 Volume

Citrus greening disease

continues to hurt the citrus

growers in the State of

Florida. The most recent

USDA forecast for 2015

production calls for 102 million

boxes of fruit. Considering

Market ReportCITRUSANDALLIED.COM

CITRUS AND ALLIED ESSENCES MARKET REPORT MARCH 2015

ORANGE

that the demand for fresh fruit is in the mid 40 million-box

range, this leaves very little fruit for processing. With a

box count of only 102 million, the resulting 60 million

boxes of fruit for processing is much lower than the

historical norms we came to expect for decades.

Typically, less production leads to higher prices unless

there is surplus product available from other origins. The

estimates for the 2015 crop in the citrus producing zone of

Sao Paulo and eastern Minas Gerais commercial areas of

Brazil call for a reduction of up to 25%. This 1-2 punch to

availability for orange will certainly put a floor under its

price and a squeeze on availability.

Another fact worth noting is the decline in demand for

orange juice. At the end of June 2014, estimates from

Brazil indicated that the inventory of orange juice was 15%

higher than the previous year and represented the

equivalent of over 20 weeks of consumption. High

inventories of unsold juice could dampen the enthusiasm

of the processors to continue building inventory. This

could further reduce the total amount of available orange

oil.

The outlook for orange is unfavorable. Unfortunately,

there are more good reasons to cover inventory needs

than there are good reasons to wait. C&A is in a strong

position to supply you with your requirements for orange

oils from most origins in both single and folded forms.

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Items

4 Orange

4 Lemon

4 Lime

4 Grapefruit

4 Tangerine

4 Essential Oil

4 Star Anise & Natural Anethole

4 Basil

4 Bay Oil

4 Bitter orange

4 Buchu

4 Cardamom

4 Carrot Seed

4 Cassia & Natural Benzaldehyde

4 Cedar leaf Western Red

4 Chamomile Roman

4 Cinnamon Leaf /Bark

4 Clove Leaf & Eugenol

4 Coriander seed

4 Cumin Seed

4 Davana

4 Eucalyptus Radiata (New)

4 Eucalyptus & Eucalyptol

4 Garlic

4 Geranium

4 Ginger

4 Ho Wood (Natural Linalool)

4 Lavender

4 Lemongrass

4 Litsea Cubeba & Natural Citral

4 Mandarin Petitgrain (Mandarin

Petitgrain Terpeneless)

4 Mint – Peppermint & Spearmint

4 Nutmeg

4 Petitgrain Cordillera

4 Pimento Leaf

4 Rosemary

4 Thyme Spanish Red

4 Wintergreen

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2014 was a year we will not easily forget as it regarded lemon. But it is

finally behind us. The winter crop availability for lemon oil produced in

Spain and Italy is better than in 2014. As predicted, lemon prices have

fallen. While they have fallen in a meaningful way, the decline has

plateaued. We anticipate, and very much hope, that the return to a more

normal crop size in Argentina will put additional pressure on the price.

Even if the production of lemon oil in Argentina does not quite reach the

mean for production over the past 10 years, improvement should lead to

lower prices. Assuming this proves to be true, the next step down in price

should occur in July. Based on our most probable scenario, we are advising

customers to cover their needs in the short term (2-4 months) and let the

market come to them.

LEMON

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As with lemon, we were happy to see the calendar click over to a new

year. Although the problem of Citrus Greening continues to plague the

lime ranches in Colima, we are somewhat optimistic that lime production

will improve in 2015. New crop production will begin after Easter and hit

its stride by late June. We are hopeful that the stronger dollar combined

by a modest decrease in the price of industrial fruit will help to bring lime

prices down from their current position in the stratosphere.

There is little hope that the political and civil unrest in Michoacan will

improve, however, it is possible that the amount of fruit for processing will

increase. This should also help to bring prices down to a modest degree.

In summary, lime prices are not going to collapse, but they should soften.

LIME

Increases in the price of grapefruit oils have accelerated. Although the

small box count of 15 million has matched demand, it appears that the

availability of top-quality oil has more demand than supply. For that

reason, the slope of price increases has become more acute. As

mentioned in our last report, Citrus Greening Disease does not distinguish

between oranges and grapefruit trees and the number of trees in Florida

continues to diminish.

Securing the right quality is a challenge and the best reason to cover your

requirements well ahead of time. We invite your inquiries.

GRAPEFRUIT

2015 begins where 2014 left off. Reduced availability for tangerine oil has

led to modestly higher prices. Demand has remained consistent so the

challenge continues to be to source material of the right quality. We

anticipate flat demand for 2015 and remain hopeful that supply will satisfy

the needs of our customers. As always, it is never too early to cover your

needs for tangerine, and, as such, we invite your inquiries.

Since the demand for tangerine is not that large, we encourage our

customers to provide us with forecasts so that we can set aside material

and keep this product from becoming a problem.

TANGERINE

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Essential Oil

Anise oil is grown in the Yunnan Province of China. Since the autumn crop

was produced with average yields, prices remain in the same range as last

year. It is reported that these price levels are frustrating to the growers who

collect the fruit and leaves. All things considered, the time to cover your

long-term requirements is undoubtedly in March as prices could spike if the

demand picks up. The peak harvest time is October to January so this is a

good time to review your future requirements. We continue to be in a strong

position and welcome your inquiries.

Star Anise & Natural Anethole

The July crop in Vietnam was similar to last year and a good one. The

general sentiment is that prices will inch up as the stocks at source are sold.

We have a good position and invite your inquires.

Basil

As we reported in the last edition of the Crystal Ball, this Caribbean essential

oil, a long-standing trouble-free product, has become an acute problem

during the past six months. This past year it was reported that new social

programs permitted many of the workers to take free government money

rather than work (to produce the oil). This development has created a rapid

decline in production resulting in severe shortages. We have been working

diligently on this tropical essential oil and recommend you contact us by email

or phone for up-to-date information.

Bay Oil

The crop in Brazil is complete. While the crop was marginally better than last

year, the oil is currently sold out at source. In the Dominican Republic the

crop is well underway and reported to be of average size. Given the limited

availability, it is advisable to communicate your annual requirements in

advance. We continue to be very active in this specialty essential oil and

maintain a good position of oil produced in both the northern and southern

hemispheres.

Bitter orange

These South African essential oils are available but with the recent robust

demand the prices have firmed. We continue to offer a variety of Buchu oil

qualities.

Buchu

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The Guatemalan crop is 90% complete and said to be a shorter harvesting period

than previous years. It is believed that the crop is going to be approximately 20%

down from the previous year. This shortfall has caused the seed prices to firm. All

of this news was predicted from the producers who anticipated a shorter crop due

to the El Nino phenomenon. In India, the crop appears to be approximately 10%

below normal. In contrast, the seed prices have firmed above 40% as the Middle

East covers their large Ramadan 2015 requirements. Our recommendation is to

give us your annual requirements so we can negotiate the best possible prices for

the coming year. We are well positioned to help with your needs.

Cardamom

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Carrot seed oil appears to be more plentiful than the previous two years.

However, if you have sizeable needs we recommend staying ahead on this

unique essential oil.

Carrot Seed

With the October/November crop reported to be average the harvest of the

leaves and twigs should be in balance. The price has remained relatively flat

and we maintain a strong year-round position on this popular essential oil

grown in Southern China.

Cassia & Natural Benzaldehyde

If you have any upcoming sizeable needs for this unique oil please contact us

many months in advance to source/contract this hard-to-find essential oil.

Cedar leaf Western Red

Chamomile Roman is sold out until the next harvest in June-July due to a

failed crop last summer.

Chamomile Roman

As previously reported, the inclement weather did affect the cinnamon yields

and prices have increased. In the last update we stated that from an

historical standpoint prices were too low and would correct. We recommend

that customers provide us projections as soon as possible as cinnamon leaf

oil has the potential to be difficult to source in the near future. The smaller

volume cinnamon bark oil looks to be more stable.

Cinnamon Leaf /Bark

This Indonesian essential oil primarily from Java has seen some recent

upward pressure due to the heavy rains during the last 2 months. Citrus and

Allied is basic in Clove leaf and maintains a healthy stock position for our

customers year-round use.

Clove Leaf & Eugenol

This may be the most uncertain of all the essential oils in 2014 & 2015 given

the fact that most of the seeds are grown in the Russian-Ukraine-Crimea

territories. While the very recent seed crop appears to be adequate, the

strong demand for the spice itself coupled with the tenuous political and

economic situation create a big question mark. We have been working

closely with many of our customers to keep them supplied with oil as the next

crop is still 7 months away. We are hopeful that the situation might improve in

the 4th quarter of 2015. In the meantime, if you need some volumes please

inquire before it is too late.

Coriander seed

With the continued political instability in the Middle East we recommend

staying ahead on this spice essential oil. In spite of all the uncertainty, prices

have remained flat, but, that could change with an expected shorter spring

crop or further political unrest. The next crop is in April. We welcome your

requests.

Cumin Seed

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The news of production out of Karnataka, India is that the season is starting a

month later than usual due to unseasonal weather. Small quantities are

beginning to be distilled. This year's additional planting was curtailed with

rainy weather and in recent days the untimely rains has again hurt the yields

on this very fragile crop. We continue to monitor this beautiful aromatic

apricot oil and take positions to satisfy the demands of our traditional

customers.

Davana

This new essential oil has been plagued with frost and drought which has hurt

both the collection of the leaves and yields for oil. We are hopeful with better

weather this summer we will be able to offer additional volumes to our

growing customer base.

Eucalyptus Radiata (New)

Prices edged up in the last quarter of 2014 and have now stabilized. The

Yunnan Province has recently experienced snow which has hampered

production along with the Chinese New Year. However, all things considered,

prices have remained steady. The next peak crop period is June-August

which is traditionally the best time to contract.

Eucalyptus & Eucalyptol

As we predicted, garlic prices have risen sharply over the past few months,

and, it appears this trend will continue until a decision is made to distill

additional garlic. The decision to distill more oil takes place in the late Fall

when the bulbs are dry and distillation can be cost-effective. In the

meantime, finding good quality oil will be a challenge. Currently, we have

excellent quality stocks to offer but only while the supply lasts.

Garlic

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It was unusual to watch two completely opposite price trends in the same

essential oil family. The price of Chinese geranium continues to escalate with

the recent short crop coupled with high demand, while the Egyptian quality

has finally bounced off its recent low price.

Geranium

With the conclusion of the recent crop, robust demand on the spice side has

continued to support higher prices for dried roots (for distillation). It was also

related that the production was shorter than last year which in turn has kept

the prices firm. We continue to have a solid position on this spice essential oil

and welcome your requests.

Ginger

Due to the extreme heat and lack of trees in the growing region, the

production of oil and availability in China was reduced. Accordingly, prices

have firmed but have since plateaued. We have adequate stocks to fill your

needs and invite your inquiries.

Ho Wood (Natural Linalool)

It is now apparent that 2013 was the only positive growing season in the past

4 years. Production in 2014 was complicated by heavy rains which seriously

hurt the oil yields during the summer harvest. It is reported the total output

was 30% less than in 2013. As such, prices have increased considerably and

are expected to climb higher as the dwindling supply is consumed in the

market place. Our recommendation would be to cover your short term needs

until the August/September crop.

Lavender

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In a repeat of our last report, we see lemongrass the same as the previous

year. Again we must point out, that we continue to contract in advance so that

Guatemalan lemongrass is planted and distilled to keep pace with the rising

demand of this beautiful aromatic Central American oil.

Lemongrass

In contrast to the 2013 crop the news on Litsea from the Yunnan & Jiangxi

Provinces was not positive in 2014. While the numbers reported vary from

supplier to supplier, the overall picture is clear and indicates that production

was off 20 to 40%. We think the best buying opportunity was before the

Chinese New Year and we now expect prices to inch higher until the next

harvest in September. It is also reported that the carryover from last year was

the lowest it has been for some time which puts additional pressure on prices.

We recommend providing us with your citral requirements so we can cover

you until the next crop.

Litsea Cubeba & Natural Citral

The January processing has taken place and prices are now expected to firm.

Mandarin Petitgrain (Mandarin Petitgrain Terpeneless)

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In a nutshell, the winter freeze and extended cold temperatures took a toll on

mint acreage. The weather severely damaged and or killed significant

acreage in the Washington & North Central Oregon growing areas. In

addition, the prolonged hot weather in Idaho & the Willamette Valley has

caused elevated menthofuran levels. Collectively, all these factors have

caused the low furan and double cut oil to strengthen in price and put future

availability in jeopardy. It is also estimated that 90% of the Willamette

Mint – Peppermint & Spearmint

In contrast to the past 5 years of increasing and elevated prices, Nutmeg oil

has softened considerably in the last 30-60 days. A weaker Indonesian

Rupiah, new plantings in the traditional growing areas of Sumatra, and the

new growing region of Sulawesi have collectively calmed the spice demand

as well as satisfied the demand on the oil side. However, it goes without

saying that we continue to strive to find the highest quality oil and maintain

strong positions for our customers. Citrus & Allied welcomes your inquiries.

Nutmeg

While the October harvest has come and gone, future availability, while

slightly improved, is still difficult. This is an essential oil where planning 6

months out to insure delivery is recommended.

Petitgrain Cordillera

peppermint is contracted and at this time of the year practically sold out. All in all, the acreage is down as

growers look to alternate crops for better returns. In India, mentha piperita, menthe arvensis and spearmint

prices have softened along with the derivatives (menthol crystals) until the demand picks up. In contrast to

the last 6 months, the Indian Rupee has stabilized for the time being. We look forward to your myriad of

inquiries on all mint products.

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The collection of leaves has come to the end in Jamaica and while little

carryover exists it does appear that this season will be stable on the supply

side. Since the initial pimento leaf harvest comes during hurricane season it

is recommended to stay ahead. We are here to help.

Pimento Leaf

The availability of Rosemary oil has gone from bad to worse. The recent

harvests in Morocco and Tunisia have been problematic while the demand is

up. We see this oil as being a year-long challenge. C & A has acted

accordingly and has a strong position while supplies last.

Rosemary

This wild plant grown in the mountains is severely short in supply. The limited

supply is due to two consecutive years of below average rainfall which has

curtailed the yields as well as inventories at source. We will keep our eyes

on the weather and report back on the supply this summer.

Thyme Spanish Red

This past year the July-August harvest was disappointing which has been a

multi-year theme on this boutique oil. While it is difficult to predict this year's

crop we do know that little inventory exists at source and the harvest is still

six months away. This is one product that it is essential to have your

requirements in place by April/May so we can communicate to our sources in

China for a September shipment.

Wintergreen

citrus and allied essences · 2014 was a year we will not easily forget as it regarded lemon. but...

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