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Category: Market Report

  • Citronella Oil 85/35 Java

    Rainfall in Indonesia continues to impair the production of citronella oil. Prices are moving up and quantities are limited.

  • Valencia Citrus Market Update

    Spain’s Citrus Management Committee (CGC) recently published a statement indicating “the campaign hasn’t been brought to a halt by the floods. All warehouses in Valencia are operational and guarantee supply to the EU.”

    This comes in response to historic storms that struck eastern Spain in late October, causing torrential rains and widespread flooding in several regions throughout the nation, including Valencia and Andalusia. In the immediate aftermath of these storms, the citrus season in the region was slowed due to issues accessing fields and transportation. Valencian agricultural organizations stressed that most of the damage caused to the sector was dealt to infrastructure, such as reservoirs, pipelines, irrigation wells, fences, and other enclosures.

    The CGC believes the recent floods have not harmed much of the current orange harvest, and farmers will likely be able to gather the mature fruit once the debris has been cleared from fields.

    Despite this damage, the CGC reports that all packing warehouses in the province of Valencia have returned to working at full capacity, and all large European retailers in the EU are guaranteed a good supply of mandarins and oranges.

    Inmaculada Sanfeliu, President of the CGC, has stated “As soon as we manage to fully access the affected fields, most of which are still muddy, we will certainly be able to harvest a good part of this fruit, because it will be ready to be marketed fresh or to be processed into juice.”

    Valencia is one of Spain’s most populated municipalities, with more than 800,000 residents. The area is well-known for its agriculture, earning a reputation as Spain’s “immense garden.”

    In Valencia, logistics remains the largest challenge for exporting citrus. Roads and other key transportation infrastructure have suffered severe damage due to the storms, and many regions remain inaccessible. However, the CGC has already asked Spanish authorities to enable a corridor for perishable goods such as citrus fruits to ensure supply chains remain active.

  • Global Citrus Update 2023-2024

    Fundecitrus Report
    December 2023

    Fundecitrus recently published its second forecast of the 2023-2024 orange season within Brazil’s citrus belt, updating its total production estimate to 307.22 million boxes.

    This update represents a 0.7% reduction, or around 2.12 million fewer boxes, compared to previous estimates. One of the primary contributing factors behind this reduction is the overall decline in fruit sizes – lack of rainfall between May and November restricted citrus fruits during a key growth period within Brazil’s citrus belt. Citrus greening also remains a concern within these estimates, as smaller fruit sizes are often associated with issues stemming from the disease’s spread.

    Fruit sizes were smaller than average throughout 2023, though fruit droppage rates decreased compared to previous seasons.

    Despite these challenges, Fundecitrus reported that fruit droppage rates decreased this year, which softened some of the initial impact of these effects, though it did not completely offset the decline. Farmers have also recently accelerated the rate at which they harvest citrus fruit, which leads to a shorter period for fruit development.

    Moving forward, the El Niño weather pattern has taken effect within the region and will likely remain dominant throughout the first half of the 2024 season. El Niño often brings higher temperatures and drier weather conditions to Brazil, which has the potential to disrupt new citrus blooms. This pattern, combined with the UN World Meteorological Organization’s (WMO) predictions that 2024 will be another year with record-breaking temperatures, seems to indicate that the orange market will remain high throughout the early months of 2024.

    Regional Update: Argentina

    Argentina re-entered the EU citrus market in November after more than 20 years of absence due to export restrictions.

    As one of the largest citrus producers in South America, Argentina plays a vital role in the fresh and processed fruit market. The reopening of the EU citrus market to Argentina marks an important economic milestone for the future of citrus production within the nation. As exports of citrus grow, so too does commerce and employment opportunities for those operating within Argentina. Production of organic citrus in Argentina is also expected to expand in-tandem with the rising global demand for organic products.

    The citrus industry plays a key role within the Argentinian economy, and citrus orchards are expected to grow in tandem with newfound demand from EU buyers.

    In 2023, Argentinian citrus production was around 10% lower than the previous season. This recent dip in production is mainly attributed to poor weather conditions, which resulted in harvest delays near the beginning of the season.

    Regional Update: Brazil

    Researchers at the Center for Advanced Studies on Applied Economics (CEPEA) have predicted that a new heat wave will envelop São Paulo state in early 2024. These heightened temperatures are expected to linger throughout the 2024-2025 growing season, which has the potential to affect citrus production within Brazil’s citrus belt.

    The region has already endured higher-than-average temperatures throughout November 2023, resulting in early blooms. Fields and orchards with strong irrigation systems can often mitigate the worst of these effects, though they become increasingly difficult to manage as heat waves and droughts persist.

    Regional Update: USA

    The California Department of Food and Agriculture (CDFA) has recently established an expanded quarantine area for citrus greening after new research and damage assessments were conducted alongside the U.S. Department of Agriculture (USDA) and San Diego County authorities.

    Citrus greening is the leading factor behind Florida’s 70% reduction in orange production since 2005, making it one of the most destructive agricultural diseases in the USA.

    This quarantine marks the first time the greening disease (HLB) has been confirmed in Valley Center, California, making it the third area within San Diego Country to test positive for HLB. The disease is a tree-killer that has already caused a 70% reduction in Florida’s orange crop since 2005, as well as widespread fruit loss in other regions such as Mexico and Brazil.

    Quarantined areas prohibit residents and commercial operations from removing any plants hosted within that area, and all fruits grown within quarantined regions are subject to additional testing and examination before they can be cleared for exiting the quarantined region’s borders.

    Regional Update: Mexico

    Prices for orange fruit, orange oil, and its various derivatives continue to remain near all-time highs, as demand for NFC (not from concentrate) juice and fresh citrus remains strong. Poor weather conditions and the persistent presence of citrus greening within key growing regions of Mexico have resulted in year after year of difficult growing seasons for farmers. As such, prices for orange oil and its derivatives are expected to remain consistent throughout early 2024.

  • The Effects of El Niño in 2024

    After three years of cooling provided by the La Niña weather pattern, El Niño has returned and is estimated to remain dominant throughout the first half of 2024. With it, the UN’s World Meteorological Organization (WMO) has warned that rising temperatures and shifting weather patterns brought on by this change can threaten industry and agriculture in many regions around the world.

    El Niño is a global climate event that is commonly responsible for increasing temperatures and worsening extreme weather events. It is caused by ocean temperatures and winds in the Pacific that shift from cooling to warming, transitioning from La Niña and into El Niño.

    In the United States, El Niño causes drier and warmer weather in the north while causing widespread and intense rainfall in the south. The weather pattern also increases the frequency and intensity of hurricanes in the Gulf of Mexico, which can damage agriculture in growing regions such as Florida, Mexico, and the Caribbean.

    In Europe, El Niño often brings colder and drier winters to northern territories, whereas southern Europe experiences warmer and wetter climates.

    In Indonesia and Australia, El Niño is known for increasing the length and intensity of dry conditions, causing droughts and wildfires in high-risk regions. El Niño also reduces the overall rainfall in India and South Africa, which has a particularly large effect on India’s Monsoon season.

    While all these shifts in temperature and rainfall are gradual, they can have a major impact on the world’s overall weather conditions – before 2023, the hottest year on record was 2016, which coincided with the shift from La Niña to El Niño. As of early November, the National Oceanic and Atmospheric Administration confirmed that 2023 has broken the previous record and will become the new hottest year.

    All of these factors place 2024 on-track to be one of the hottest years on record yet again, with heatwaves and droughts made worse by the various weather conditions brought about by El Niño. Even as the transition began in October 2023, the world experienced record-breaking temperatures and historic droughts in key waterways including the Panama Canal.

    Berjé will continue to monitor weather conditions in key growing regions throughout the world, providing at-source updates on our products as they become available.

  • US Trends in Essential Oil Imports

    Over the last five years, we’ve observed multiple widespread shifts in the perception and purchasing habits behind essential oils within the US.

    In the years preceding COVID, the total annual import of essential oils into the US averaged around 113,000 MT (per USDA). Purchases began to increase near the midpoint of 2020, as the pandemic’s severity ramped up around the world, forcing many farms and distilleries to cease production. Combined with the increased demand for products such as hand soap, sanitizer, and other cleaning solutions, the global essential oils market experienced a period of unprecedented growth.

    This growth continued into 2021, with essential oil imports reaching their peak amidst the height of the pandemic. Demand was increasing month after month, compounded by the constant uncertainty surrounding COVID-19 and its impact on regional production operations. As such, many businesses stockpiled years’ worth of supply, safeguarding themselves against potential shortages or supply chain issues. This practice drove import volumes even higher, and the USDA estimates the total quantity of essential oils imported into the US during 2021 is just under 130,000 MT.

    Since then, the pandemic has gone into remission in most regions, and essential oil markets have cooled to their normal levels. However, the intense stockpiling habits and ramped up production of the pandemic has had a reverberating effect on many essential oil producers throughout the world.

    Between June of 2022 and 2023, we’ve observed a sizeable decline in the volume of essential oil imports to the US. Some products, such as Orange Oil and Lemon Oil, have experienced a much larger decline than most. Other products, such as Lavender Oil and Lavandin Oil, have had their total production areas significantly reduced at source, which will likely have a major impact on the total quantity of material available for distillation in the coming seasons.

    All of this is to say that we expect 2024 to be a period of rebalancing for essential oil imports. Much like importers, farmers are constantly balancing their positions on various products throughout the ever-changing landscape of the essential oils market. When overall production of certain products changes, so too does global demand for those products.

    As long-time experts of both global sourcing strategies and global supply chain management, Berjé is uniquely positioned to continue providing our customers with reliable volumes of high-quality essential oils, even amidst widespread market rebalancing.

  • ICBC 2023 Recap

    Brazil

    According to the latest “Brazilian Citrus Overview” presentation given by Vinícius Trombin from Fundecitrus/Markestrat at the ICBC Conference, held in Clearwater FL on Sept 20th, 2023, citrus greening (HLB) has become an increasingly difficult problem for farmers to manage within Brazil’s key growing regions.

    Greening rates have increased from 24% in 2022 to over 38% in 2023. The citrus belt has been hit especially hard by the increasing intensity, forcing many farmers to move or expand their operations outside their normal territories. As these farming operations reorganize, the overall cost of citrus increases – beyond the initial investment required to expand or construct orchards, the cost of transportation is much higher outside of Brazil’s citrus belt.

    Other citrus growers have switched to other, more profitable crops rather than navigate the challenges presented by citrus greening. Popular alternatives to orange production include sugarcane, eucalyptus, and pastures for livestock.

    Despite these recent issues, Brazil’s orange production metrics remain unchanged at 309.34 million boxes. There is no carryover from previous seasons, and demand for NFC (not from concentrate) Juice continues to rise. As such, prices for orange oil are expected to remain firm. The crop has been slightly delayed, and new imports are expected to arrive in October.

    Mexico

    Based on the presentation “Marketing the Lime Industry in Mexico” given by Leo Espinoza from Rio Grande Juice Co. / Wonderful Citrus during the ICBC Conference, the fresh fruit market in Mexico is expected to remain strong. Around 60% of Mexican limes are consumed fresh domestically, while the remaining 27% and 13% is allocated for fresh fruit exports and processing respectively.

    Due to the high demand for lime, many farmers in Mexico have started to expand their planting and production operations within key growing regions. However, new lime trees require 2-3 years of maturation before they are ready for harvest. As such, we expect these new planting initiatives to have little to no effect on short-term price fluctuations.

    New lime oil out of Mexico will become available in December, as the nation enters its winter crop, though this harvest is significantly smaller than the summer crop and will likely not provide much relief for current demand. Prices for lime oil are expected to remain firm, but it’s quite possible that they have also reached their peak.

    Orange production in Mexico typically totals around 5 million MT, as compared to Brazil’s 18.7 million MT. Mexico typically has no carryover for orange oil and always sells out every season, and we currently see no reason that this will not be the case again this year.

    Areas reserved for grapefruit production in Mexico have declined 30% this year, as groves were uprooted to make way for sugarcane production. Citrus greening played a role in this decision, as the disease mainly affects oranges and grapefruit. The market for grapefruit oil is expected to begin firming, depending on demand.

    Peru

    Domestic demand within the fresh fruit market is strong in Peru – 80% of fresh limes are consumed domestically, and very few are exported. However, unlike Mexico, the remaining 20% are allocated for processing juice and oil. Despite this, the volumes produced in Peru are nowhere near what Mexico produces each year.

    Due to increasing demand, many growers in Peru have started to expand their production areas, much like in Mexico. These trees take 2-3 years to mature, but recent El Niño forecasts have the potential to disrupt this growing process, as well as other groves around Peru. If the effects of El Niño are moderate, it will likely have little to no effect on lime groves. However, if the effects are severe, then the weather conditions surrounding it have the potential to greatly impact volumes for the upcoming lime season (November – April).

    New lime trees require approximately 2-3 years before they reach maturation. This means that recent planting initiatives in regions such as Mexico and Peru will likely have little to no impact on the short-term price fluctuations within the current lime market. However, as these groves mature and fruit becomes more available, prices should improve accordingly.

    Argentina

    Lemon oil production in Argentina has experienced difficulties this year due to a combination of currency inflation and extreme weather conditions. This is the second year in which the blooming period for lemons was interrupted by poor weather, impacting the overall yields for both fresh fruit and processed material. Argentina is now losing ground against competing lemon-producing nations such as Spain and South Africa. Much like Mexico and Peru, Argentina is also converting some of its citrus production to sugarcane, which will likely reduce future yields. As of September 2023, around 6,000 hectares of lemon orchards have been cut and replaced by sugarcane plantations.

    Lemon trees require very little water in comparison to other fruits and can survive in extremely dry conditions. However, excess rain can cause damage to root systems within orchards, resulting in long-term issues with fruit production.

  • Panama Canal Drought & US Shipping Delays

    While the conversation surrounding labor continues in many regions throughout the US, the ports of Long Beach and Los Angeles reported that they had effectively “shut down” due to disruptions staged by the International Longshore and Warehouse Union (ILWU). Similar work actions were also reportedly held at the ports of Oakland, Tacoma, Seattle, and Hueneme.

    While official statements from these ports indicated that they were open for business during the week of June 5, 2023, the largest terminals in crucial ports such as Long Beach had canceled all trucking orders for imports and exports, leading many to believe that the ILWU was unhappy over the current state of labor talks.

    The current drought in Central America is believed to provide the ILWU with additional leverage in upcoming labor talks, as shipping channels to the US East Coast are limited.

    These shipping issues were further compounded by recent droughts in Central America, which caused the Panama Canal Authority to institute new limitations on the drafts of large, “Neopanamax” vessels. These are the largest vessels capable of transporting goods through the Panama Canal, and limiting their draft to 44 feet (down from an already-reduced 45 feet) makes them incapable of shipping the same quantity of goods that would otherwise be permitted.

    This new draft limit went into effect on May 30, 2023, leaving shippers with the following options for transporting their goods:
    • Reduce boat landings and overall cargo per vessel to limit their draft.
    • Use rail or trucking routes from US West Coast ports to East Coast destinations.
    • Ship goods via the Suez Canal and Atlantic Ocean.

    Panjiva data shows that 77% of US pharmaceutical imports and 58% of chemical imports were shipped from Asia and received at US East Coast ports in 2022. The average percentage of imports from all US sectors was 46%.

    All of these alternatives take longer to deliver material than the traditional Panama Canal routes: land transportation from the west to the east extends travel time by an average of 10 days, and Suez Canal routes extend travel time for ships by about 5 days. It’s important to note that these shipping delays have arrived just ahead of the peak global shipping season, which will likely cause further delays.

    If these droughts near the Panama Canal continue, they have the potential to combine with the ongoing West Coast port shutdowns, leading to a difficult summer season for essential oil and aroma chemical imports to the US East Coast.

    • Header Image and Article Image #1 provided by tawatchai07 on Freepik

  • American Cedarwood Update

    Market & Supply Updates

    The Juniperus virginiana (Cedarwood Virginiana) and Juniperus mexicana (Cedarwood Texas) trees are legendary for their resilience, especially when faced with hot and dry conditions. There are 10 million cedar trees in Texas Hill Country alone, with countless millions more spread across the American Southeast. These are botanicals that are highly tolerant of windy and salty conditions, allowing them to survive in everything from brackish swampland to barren sand dunes. As such, the supply of cedar trees has not been affected by the recent extreme temperatures in Texas and elsewhere.

    The same cannot be said for collectors and producers in the Southeast, though they are looking forward to some much-needed cool weather over the coming months. Securing a steady supply of oil remains challenging, but improvements continue to be made. We expect these numbers to ramp up as temperatures in the American Southeast continue to cool down.

    Current Situation

    For our producers and partners in the American Southeast, finding new labor remains difficult. Labor costs in the US are very high right now, and staffing is a major concern almost everywhere.

    Thankfully, Berjé’s direct investment in collection equipment for cedarwood is coming to fruition, and wood deliveries have greatly increased in recent weeks. Costs remain very firm, but the availability of new material is returning to healthy and sustainable levels.

    Future Outlook

    Despite the ongoing delays and rising labor costs, production improvements and expansions continue to be made, albeit slowly. Berjé has made strong investments in the future of American cedarwood, and our recent facility improvements should result in increased oil volumes over the next few months. Production capacity continues to increase, and the supply of cedar trees remains massive. The material is out there; we are simply improving the labor and equipment required to process it.

  • Berjé Barometer – Florida Freeze

    South-Central Florida experienced a bout of extremely cold weather during the last few days of January, resulting in frost and icing throughout many Floridian orange groves. In the immediate aftermath of this event, farmers initially reported that the damage to their groves was minimal. However, more recent estimations paint a clearer picture of the frost’s effects, with certain grove locations recording temperatures as low as ~20 degrees Fahrenheit lasting for upwards of two days. Such sustained conditions of frost have not been observed in Florida for over five years. Temperatures below 30 degrees often lead to bloom damage on citrus trees, which can drastically affect the quality of their subsequent harvests.

    Fruit droppage rates also appear to be a major issue for many Florida citrus growers post-freeze. As temperatures drop for sustained periods of time, the juices contained within citrus fruits become frozen, resulting in premature fruits dropping from their branches. This can happen in as little as 6 hours after exposure to substantial freezing temperatures; Florida’s freeze lasted for two days. As such, it will be difficult for farmers to fully assess the damage dealt to their groves until temperatures warm up to regularity once again. Other conditions expected to affect citrus trees in the region are wood injury and external fruit damage, both of which will reduce harvest levels.

    Image Source: News 6 Central Florida Cold Weather Outlook

    Florida has already weathered a challenging orange season up to this point, with fruit estimates falling from 47 million boxes to just 44.5 million midway through January. These shifting numbers represented a 13% reduction in harvest size when compared to Florida’s previous orange season, and it seems as though the difference between the two will only continue to grow from the effects of the freeze.

    The global orange market is quite volatile currently, with prices rising on a regular basis due to an ongoing drought in Mexico and a difficult growing season for Brazil (frost has also been an issue there). As such, it seems likely that orange oil and its derivatives will continue to rise in price as availability of new materials reduces.

    Source List
    https://edis.ifas.ufl.edu/publication/HS1275
    https://citrusindustry.net/2022/02/02/freeze-damage-update-for-florida-citrus/
    https://www.clickorlando.com/news/local/2022/01/28/florida-freeze-this-weekend-everything-you-need-to-know/
    https://www.wesh.com/article/icicles-orange-trees-florida/38933742
    Header Image: https://twitter.com/MarleiMartinez/