There are many things that can be said about the citrus oil industry. Being stable is certainly not one of them, Geva Adut, CEO of Trisun comments for FJF
After the high rise in prices two years ago (mainly for grapefruit products but not only) and the significant decline a year ago, prices seem to have stabilized and even started to bounce back up.
Orange oil and its derivatives (D-Limonene and Terpenes)
The demand for orange oil remains high while future production is expected to be lower than last year. Prices are dictated mainly by the Brazilian market and because the crop in Brazil is estimated to be smaller this year compared to last crop, it seems that the supply of oil and Terpenes/D-Limonene will be lower as well.
Mexico and other markets are also forecasting lower crops compared to last year, and therefore prices are projected to increase. In fact an increase in CPOO price is already happening, we see offers in the market at price level of 5-6 Usd/kg, and this represents an increase of 2-3 Usd/kg compared to last year’s prices. We also see offers at price level of 3.5-4.5 of Usd/kg for D-Limonene/Terpenes, depending on the application and quality.
After significant price decline, there is a trend shift and prices have slowly started to go up early 2020. Crops are expected to be lower for Lemon in most markets. Argentina expects a reduction of about 10% compared to last crop while in Spain the trees were hit after the blossoming stage and forecast is for reduction of in yield compared to last year. This, together with constant demand, is pushing slowly but constantly the price up.
Red grapefruit oil
The excess supply in the market is decreasing and there are indications that the price is starting to stabilize. We see offers in the market around 12-15 Usd/kg, depending on the pesticide levels and general quality/Nootkatone level.
White grapefruit oil
The price is stable. Volume continues to be limited. Unfortunately, this trend may continue in the future.
Sweetie (A hybrid of Pomelo and White-Grapefruit)
This citrus cultivar grows almost exclusively in Israel, and therefore its supply is limited. Yet, the demand is rising. The world of perfumes and beauty industry seem to discover the unique characteristics of this oil, which are in a way similar to white grapefruit oil, but with a twist of freshness to it.
(Note: We have not included lime, mandarin/tangerine in the scope of this article, nor other by-products such as oil-phase, folded oils, distilled oils, naringin).
Organic certified oils
The demand for all organic citrus oils is rising. Orange and lemon organic oils are in high demand, above all, white organic grapefruit stands out because of the limited supply of this trade.
REACH in Europe is a major challenge especially when selling oils to the fragrance market (REACH is only valid for non-food). The dominant suppliers in the market have registered products for REACH but most processors are not compliant with this regulation as they are focused on the food industry. We believe that this is an interesting market and processors that will put emphasis on this direction will increase the number of their customers.
The new regulations banning various pesticides (especially the recent ban of chlorpyrifos and chlorpyrus-methyl which are now banned in Europe and the United States) cause difficulties to sell significant volumes of the oils produced.
As it was published in a few global official articles, there is evidence that this issue is starting to affect not only the oils/by-products market but also the juice segment and there were news about some cases in which big volumes of juice were shipped back to processors after finding the pesticide level exceeded the threshold.
We believe that in the future there will be no choice but to deal more seriously and deeply with the pesticides issue, especially in mutual cooperation programs with the farmers/agriculture side.
To conclude, in general, the oils and by-products market is mostly in a Bull market (a Rising market if to use analogy from the stock exchange market). We don’t see this trend changing in the near future. We will not be surprised if prices will go even higher in some segments.
Prices mentioned in this piece are relevant for the time of writing this article – June
2020, and are based solely on Author’s opinion and knowledge. The above is not a recommendation in any way to buy or sell any product. The author’s company may have specific position in some products. Trisun is global producer and supplier of raw materials for the Food, Cosmetics and F&F industries, with focus on Citrus oils and by-products.