Harvest: All Year
It’s been a buyers market in recent months as overall demand patterns have been lower than usual, but this is not unusual when we look back in history. It is not uncommon to see this sort of demand curve and we do not believe that global consumption is down more than a few per cent.
Today’s export prices for oil do not directly reflect the prices for collecting raw material. We’ve seen export prices fall over the past couple of months yet raw material costs have remained relatively stable. This mean processors and traders are cutting into their margins to compete for business, which in the longer-term is not a healthy position for the supply chain.
Whilst the wet season has worked well for patchouli, the dry season ahead will not be so kind as many standing plants, not harvested today because of the low price expectations, will dry and be damaged. At this time, we expect farmers to insist on higher prices to compensate for yield losses and given today’s lower processors margins, any price increase will have to be passed onto the end-users. As there is a lack of raw materials and oil in the supply chain we expect any changes to be quite sudden once they happen, which could be August or September.
Those with knowledge of the history of this product will realise that these market conditions don’t last forever, so it is worth keeping healthy stocks at these low price levels, which will surely be a good investment when times aren’t quite as positive.
All the signs suggest the market has reached the bottom making it an attractive time to buy.
Market prices USD 40.00 - USD 54.00 /kilo