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.
Lemon oil prices are dependent on the size of the Argentine lemon crop, and to a lesser degree on the Spanish, Italian, and Turkish crops. All of these are especially weather sensitive. Other factors influencing price include carryover levels, and the value of the US dollar.
The current Argentine lemon oil market is difficult to predict. Limited offers are being made suggesting some availability. Spot prices have eased and demand remains strong, though there is little stock carryover of lemon oil or juice concentrate.
Genova and Eureka are the key varieties of lemon grown in Argentina. Harvesting is usually from March until August. In 2017/18, the lemon area planted is forecast to remain unchanged at 48,000 hectares. However, replacement of old plants with new ones, partly to minimise the effects of frosts, will increase the number of plants per hectare and increase yields.
2017/18 crop guesstimates vary, ranging between 1.2 million MT to 1.55 million MT. Earlier in the year Federcitrus, the Argentine Citrus Federation, predicted a crop of 1.55 million MT, while the USDA predicted 1.4 million MT, based on favourable weather conditions.
Lemon production, like other fruits, faces problems relating to high taxes and logistical costs, as well as lack of access to credit. Production costs; mainly labour, inputs, energy along with local and international transport costs are increasing. This is partly attributed to an uncompetitive peso and high inflation rates of 20%-35%. In recent years the lifting of export taxes, combined with export rebates have helped reduce upward cost pressures.
Stimulated by attractive European market conditions resulting from lower supplies from Spain and Turkey, fresh lemon exports are likely to rise. Moreover, in late April, Argentina commenced its first shipment of fresh lemons to the USA. The EU, especially Spain and Russia, are the dominant export markets, but successful efforts are being undertaken to expand fresh lemon exports to non-traditional markets.
From an estimated crop of 1.4 million MT an estimated 250,000 MT of fresh lemons will be exported due to larger production and export promotion efforts. An unchanged 70,000 MT will be consumed domestically leaving 1.08 million MT available for processing, compared with 992,000 MT processed from the previous crop.
Increased processing volumes have been facilitated by the growth in production combined with the decision to impose higher quality export standards on fresh fruit. Prices remain firm for both Juice concentrate and lemon oil.
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