Market News Service - International Trade Centre

Market Conditions
EU Markets
The market has not been badly disturbed by
the political upheavals in North Africa,
although prolonged problems in Egypt would
have had a serious impact given the range of
products for which it is an important origin.
Provided the situation there remains basically
stable – in terms of the day-to-day economy
functioning – there should not be any major
impact on product prices. Tunisia is a
commercial producer of a narrow range of
essential oils (neroli, rosemary) but it is not a
dominant origin, so the continuing disruption
there should not affect the market unduly.
Libya and Syria do not have significant
essential oil production, and Morocco, the
other major producer in North Africa, has not
been involved in the turmoil.
Prices of almost all essential oils remain firm,
driven by 2 basic factors:
The flavours and fragrances market
continues to grow, and
US Market
According to a Malagasy producer, there was
explosion of geranium and ravintsara demand
in the first quarter of the year which continues
to grow. Geranium oil is being sold at 200 euro
FOB now. They have also noticed the rise in
demand of the vegetable oil of calophyllum
inophyllum(also called forah in Madagascar).
In Guatemala the harvesting season of
cardamom has finished. The total production
expected from Sept-2010 till August-2011
seems to be 10-15% more in comparison with
last season. Prices are at high levels, which
are reported to likely stay at the same levels
until next season which starts in October.
During recent years the weather conditions
have been the most important condition
regarding production volumes in Guatemala.
US importers of essential oils are reporting
strong demands for American peppermint oil,
resulting in firm prices, which may potentially
increase in the next few months. Spearmint oil
is also reported to have firm pricing. Indian
suppliers continue to explain the lack of
Market News Service
Essential Oil and Oleoresins
Updates
Fuel costs, which represent a major part
of the costs of the production of all
products, are very high and likely to
remain so.
An additional factor is the range of crop
options that farmers have these days,
particularly short term fresh food crops. This
has resulted in farmers being able to turn
away from ‗traditional‘ crops when prices are
poor. They are no longer tied in to production
of a particular crop but have a broad range of
options to choose from. The consequence of
this is that many have permanently
abandoned the traditional cultivation of
essential oils, while others might possibly drop
the crop when returns are poor and
alternatives offer better returns. These
changes are driving the industry towards
‗sustainable‘ pricing as a necessary strategy to
avoid the continuing uncertainty over supply
and price spikes from shortages.
supplies and high prices of essential oils from
India due to adverse weather conditions,
inflation, and the strengthening of the Indian
currency against the US dollar. Likewise, in
Indonesia, shippers are reporting that even
though it was still rainy (in February when this
was reported), the situation has improved with
both prices and with available stock, possibly
due to anticipation of the end of the rainy
season.
The recent flooding in Australia has reportedly
impacted the tea tree oil distillation this year,
with estimates that the 2011 production may
be 30% less than last year. Increases in the
currently quoted prices (approx. US$40/kg) for
tea tree oil are foreseen.
In Paraguay the Petitgrain distillation season
which should have begun by now, but has
been delayed by about two months; therefore,
production is limited and producers are now
busy with other products. Oil Guaiacwood has
been taken off the CITES list early this year,
and therefore is being exported once again.
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