Lemon Oil Citrus limon (L.) Burm. F. Harvest: May - July
Significant increases in production based on the most recent forecasts suggest as much as 1.45 MMT (Million Metric Tonnes) of fresh lemons will be produced in the 2015/16 season. However, other reports suggest that the figure will be closer to the 1,300,000 MT we saw last year.
We have already seen the impact on the lemon oil market as supplies rebalance and with it, to some extent, prices. That said, this doesn’t apply to all regions as the European fresh fruit and oil markets face far different scenarios, which will also play a role in Argentina’s pricing, as demand on them will increase from other markets.
With ARGENTINA PRODUCING MORE OIL THAN ALL OTHER ORIGINS COMBINED it does have the greatest impact with regard to global supply and demand. Just as we saw in 2014 when Argentina had problems and prices rose significantly, now supplies are fully recovered prices have softened but not back to anything like pre-2014 levels. The reason is they don’t need to. The Argentinian producers are aware of the difficulties in other lemon oil producing countries and the fact that prices in these areas are actually increasing means that Argentinian producers are in a stronger position to optimise their profits this year and make up for the previous difficult times.
For 2015/2016, fresh lemon exports are projected to increase significantly to 280,000 MT (a 51 percent increase from the previous year), due to the production rebound and less fruit supply in Northern Hemisphere countries.
The main markets for Argentinian exports are the EU and Russia making up for 72% and 16% of all exports respectively. This is around 180,000 MT of fresh lemons.
More good news for the international markets is the Argentine government’s decision to remove export taxes in an effort to counter the recent devaluation of the local currency. For lemon oil this means a 3.5% decrease in local taxes, which many producers are looking to pass on to their customers in order to gain a competitive edge.
So in summary it’s happier days for the Argentinian producers but not necessarily for all end user markets. With demand increasing both domestically and internationally for fresh fruits and oil, Argentina will no doubt fill many ‘boots’ and probably at reasonably high prices. The GLOBAL NET POSITION ON LEMON PRODUCTION IS ESTIMATED TO BE 3% DOWN on last year.