MARKET REPORT JULY 2018
The following report contains updates on the current trends in production and availability of the most in-demand Essential Oils, Carrier Oils, and Raw Materials sourced from around the globe.
In India, the main growing region for Mint is expected to experience a normal Monsoon season; however, there has been a delay in the onset of this beneficial rainy weather, which usually makes its appearance in mid-June. This postponement, likely to July, is not expected to have a significant negative impact on the production of Mint.
Between 2017-18, the production of Mint was approximately 30,000MT with a carryover stock of 6,000MT, making the total availability of 36,000MT. A decline in the carryover stocks and a strong export demand in the Indian market has led to an increase in Mint prices. India is expected to yield 35,000MT to 38,000MT of Mint Oil in 2018-19, if everything goes normal. Due to a major, worldwide shortage of Mint, there has been growing demand. Hence, throughout the year, there has been an upward trend in Mint prices.
In France, the Lavandin harvest occurs between mid-July and mid-August, with harvest and distillation taking place at the same time. Compared to the weather of 2017, which was characterized by a drought and freezing temperatures that destroyed 10-15% of the plantation and resulted in the crop having to be uprooted and replaced, the weather this year has been favorable for Lavandin cultivation. The months of April and May experienced plenty of rainfall, promoting the growth of lush fields. Due to the introduction of new plants in the production phase, there may still be a lack of material in 2018-2019 despite the possibility of having a favorable yield. In the South of France and in Spain, the temperatures are currently on the cooler end of the range, which will delay the harvest by a few weeks.
Last year, the harvest yield for Lavandin Grosso was around 1300 tons, which was unfortunately not enough. At this time, it is too soon to project this year's harvest yield in France, but it is likely to be the same as last year, considering the drought in the growing regions. It is still not known how this will affect the yield, production, or prices in Spain. In France, the market demand for Lavandin is still very high, and with all the crops having been sold during the year, there is no leftover. In France, there has been a slight increase in price, as there is more demand than there is production. Due to the lack of stock, the market is tense.
In Bulgaria, the current unfavorable weather, which is characterized by rainstorms and icy rain, is leading to the destruction of many crops, including Lavender. The distillation yield is also very low, which indicates that there will be a shortage in oil volumes from Bulgaria. Subsequently, this will cause an increase in prices for both organic and conventional Lavender. Normal weather patterns were expected along with a large crop, which may have yielded over 400 tons of oil, but the rain that began at the end of June and that has continued until now, has caused most planting areas to be inundated; thus, the main issue continues to be the availability of the crop, which is down a minimum of 50%. As expected, the current demand for Lavender is remarkably high. Ukrainian and Russian producers are facing the same situation, having had to stop their production due to heavy rainfall.
In Tunisia, favorable weather conditions have benefited the Neroli harvest, leading to a consistent and abundant yield. There has been a high market demand for Neroli, and the distillers' eagerness to buy led to an increase in Neroli prices throughout the harvest, causing the prices to reach a historic high. The distillation yields have remained at average levels. Compared to previous years, the concrete production of Neroli has been stable; however, the steady demand has led to a 20% increase in prices. Tunisian production volumes are stable and could potentially increase in the coming years, due to new planting projects that are currently in progress.
In Morocco, the Neroli harvest took place under unfavorable weather conditions characterized by low temperatures, frequent rain, and little sunlight. Although the harvest season usually ends in early May, the latest harvest season was exceptionally long, lasting from the end of April to mid-May. Although the rainfall and cold temperatures negatively impacted the distillation yields, which saw a decline of nearly 40% below normal levels, there was a decent volume of harvested blossoms. This year's Moroccan production volumes are below market expectations, due to the weather conditions; however, there has been an upward trend in production.
In China, crop seeding for Litsea Cubeba will begin at the end of July, and new oil will become available between the end of August and early September. The crop sizes are expected to be the same as last year's, that is, not large. Due to high labor and production costs, the pricing is expected to stay firm for new crops, and according to some reports, there is little urgency for farmers to collect.
In China, the rainy weather has prevented further production of new Geranium Essential Oil. The oil from the early season was low in Geraniol content, not having more than 4%, thus the carryover – with 6% Geraniol – was priced much higher. According to reports, the current demand is low, suggesting that buyers are waiting for better quality. With its eye on Chinese prices, Egypt has also started to raise its prices, asserting that this year's crop is not as large as last year's and that there is no more carryover.