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.
According to the most recent USDA report, Argentina’s lemon production in 2017/2018 is expected to reach 1.55 million metric tonnes (MMT). This is an increase of 100,000 MT compared with the last crop and partly arises from more favourable weather conditions. Exports of fresh lemons are expected to increase because of the larger production and also because of the reinstated new markets such as USA, Brazil, Mexico and the gradual expansion of non-traditional markets in Asia. Nevertheless, lemons destined for the processing industry are forecast to increase to 1.18 MMT from the 1.12 MMT processed from the previous crop.
However, Argentina’s current economic situation is probably the worst facing any emerging economy, having the potential for a severe recession alongside social and political unrest. A currency crisis has meant the Argentine peso has fallen by more than half in 2018, which should put downward pressure on lemon oil prices. However, rapid inflation is predicted to reach 44% in 2018, and combined with an interest rate rise to 60% has increased production costs. Also, in early September, as an “emergency measure,” a 12% export tax on FOB export prices was announced for all exports during 2019 and 2020. A cap was imposed so the tax cannot exceed 4 pesos per US dollar of the FOB export price (i.e. based on US$ 35 per kg export price the tax would be US$ 2.85). In late October the Macri Government agreed a US$ 57.1 billon bailout package with the IMF, which has brought some stability – but for how long? The market was further complicated by the USA’s imposition of a 3.8% duty on lemon oil imports from Argentina beginning November 1, 2018.
Highlights for Argentina:
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