Lemon oil from all corners of the world is one of Ultra’s core products and is obtained by cold expression or steam distillation of lemon peel.
Lemon has a place in many culinary uses from soft drinks and cocktails to marmalade. However, it can also be used and found in household cleaning products since it can disinfect, deodorise, remove grease and dissolve wax and grime to name but a few uses.
Lemon is also used in aromatherapy to enhance moods and can be used for its anti-bacterial properties in other medicinal applications. In fragrances it gives a fresh uplifting and zesty note to any perfume as it is highly volatile.
Interestingly the three top producers of fresh lemons in the world are not the countries we would associate with oil production; the top 3 being China, India and Mexico, which account for over 40% of the world production.
Today we associate lemon oil production with Italy and Spain (Europe), Argentina and USA (Americas) and even South Africa.
Over the past 40 years Argentina's processed lemon volumes have increased significantly decade on decade, from an average annual volume of 80,000 MT in the 1970s, to 200,000 MT in the 1980s, to 540,000 MT in the 1990s and 900,000 MT since 2000. This is why today its contribution is very important to our markets.
Argentina's 2014 crop disaster put huge pressure on the global market, something we are still recovering from. Argentina contributes around 10% of the global fresh lemon fruit market. When you think that over the past 5 years Argentina has processed an average of 860,000 MT of fresh lemons then any crop 'disaster' will have a major impact on the global market.
2018/19 was a milestone year with Argentina producing a record-breaking bumper lemon crop of 1.80 million MT, the highest for over 50 years. The current 2019/20 crop, which started in March, is 10% lower at 1.6 million MT. Initial prediction figures for the 2020/21 crop suggest it could be as low as 1.0 million MT, a level last seen over a decade ago. Fruit earmarked for processing in the current year is estimated to be 1.12 million MT, substantially lower than previous years.
Stocks of lemon oil are limited. Some carryover inventory from last year are available but these do not meet the agricultural residue specifications for chlorpyrifos. Prices tend to be on the higher side depending on the quality of the oil. Considering the crop forecast, prices seem to be firming out and expected to continue for some time. The upward pressure on prices has been limited by the impact of COVID-19 on beverage consumption, as the majority of lemon oil is used in beverages. While beverage supermarket sales have increased this has been counterbalanced by a substantial fall in beverage sales in the food service sector and other distribution outlets.
Assuming a degree of normality returns along with the vaccines in 2021 then beverage demand should also show some recovery.
Ground realities have turned out to be different from what was envisaged. The winter months, that is the early part of 2020, saw an unsympathetic frost and above normal temperatures in October and November. Rainfall too was inadequate leading to arid conditions which continue even now. Consequently, the upcoming 2020/21 crop estimate is only 1.0 million MT. The volumes of fruit channelised for processing will also shrink to about 660,000 MT. With the outbreak of the COVID-19 pandemic, transportation lead times have also become longer.
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