Orange oil is extracted by simple pressure from the outer coloured part of the Citrus sinensis' peel. Oranges are widely cultivated in tropical and subtropical climates for the sweet fruit and commercially for essential oil extraction.
Orange oil is a by-product of the juice industry. Oil is cold pressed from the peel of the fruit, after juice extraction and is widely used across the flavour and fragrance industry. Sweet orange (citrus sinensis) is around 90% d’limonene, a product used across many more industries. Approximately 40% of global oranges are processed for juice and oil with 60% solely used as a fresh fruit for consumption.
Brazil has the largest production of fresh oranges and also it processes more orange than any other country making it the largest producer of orange oil and d’limonene (orange terpenes) in the world. Harvesting can be almost 12 months of the year due to the widespread distribution of plantations, however it is unusual for any significant production during February – April. Therefore we usually consider May - December as a typical harvesting period.
Brazilian oranges make up for around 34% of the world market – approximately 17 million tons+/- from a global estimate of 50 million tons +/- of fresh fruit. The Brazilian state of São Paulo contributes around 80% of the country’s production figures.
It's been a challenging time of late for the world's largest producing country and they're forecasting a sharp reduction of 18.3% in the total 2016/17 crop. To read more about today's conditions click here.
You may have recently read in our Market reports details of the challenges faced by the industry due to Citrus Greening. Click here for more details of the global impact of this wide spreading disease.
The year 2020 is taking a heavy toll on the world and Brazil farmers are a worried lot. The most recent Fundecitrus forecast of Brazil’s orange crop covering the Citrus Belt was made in September and predicted a figure of 286.7 million boxes of oranges of 40.8 kg each. This figure includes the key São Paulo and West-Southwest Minas Gerais citrus regions. It represents a drastic drop of 26% from the 2019-2020 crop, and the nadir of the last decade.
This year’s total Brazilian orange production is pegged at 382.8 million boxes, compared with 472 million boxes for the previous crop – a fall of 19%. The decrease in crop size took place mainly in the Citrus Belt. Several factors account for the substantial production decline including the alternate bearing phenomenon, where reduced availability of nutrients after a large crop leads to a reduction in crop size the following year. Climatic factors have been a key influence with drought conditions in March/April 2020 leading to reduced fruit size, while high temperatures in September/October affected setting of young fruit. There is even some concern that the crop starting in July 2021 will be affected by the drought conditions. There has been a significant reduction in the number of fruits per tree.
Rainfall deficit and a late second bloom of the previous orange crop are key factors behind this debacle. São Paulo, Brazil’s most important orange region, faced arid, dry weather for several months. The phenomenon of alternate flowering in addition to the droughtlike conditions and higher-than-normal temperatures resulted in additional stress on the young trees and hampered the setting of young fruit. There were considerably lower quantities of fruit per tree. Some amount of precipitation did provide relief but was not enough to offset the damage of the long spells of aridity. The result, a distressing effect on flowering. The late bloom in mid-June resulted in delayed harvest. The season began with satisfactory rainfall that was conducive to a healthy average fruit weight. Operations were in full swing by August, but much slower than last year. It is estimated that 97% of harvesting was completed for the early varieties Hamlin, Westin, and Rubi. Valencia Americana, Seleta, and Pineapple were 66% complete. The Pera Rio harvest was 13% complete while Valencia, Valencia Folha Murcha, and Natal had just begun with 3% and 2% respectively.
The delayed harvest and inadequate rains have affected fruit size, which is lighter than the projected weight. May and June were easy months with the rains hitting the growing areas. However, except for Itapetininga, Duartina, and Avaré, the rains have played truant thus affecting the fruit size and weight. The insufficient rains have forced most growers to resort to irrigation to tide over the water crisis. The areas that received copious rainfall could have improved on the weight of the fruit but this was offset by the larger volumes of fruit. Overall rainfall spanning the critical months from May to August was 14% lower than the usual climatological average recorded over the last few years. June witnessed returning rains that came as welcome relief but the accompanying winds caused considerable fruit drop of 17.3%.
The production of orange essential oil has been like all other sectors affected by the pandemic. Supply logistics and operations were impacted but distillation resumed in adherence to protocol. The rainy season is imminent and this will see a lull in production and lower volumes. Fruits allocated to processing are expected to reduce by at least 25% to 262 million boxes. The market is under pressure from the demand-supply aspect. While producers are struggling to meet escalating demand, supplies are rather limited. This has triggered the prices of orange oil, terpenes and d’limonene to rise.
An important factor that impacts the orange oil price is the demand and supply of orange terpenes and d-limonene, which have a variety of end uses e.g. resins, solvents, fracking and perfumes. The relationship is a complex one and the impact of COVID-19 has increased this complexity. COVID has led to an increased demand for detergents and cleaners which has increased the demand for terpenes and d-limonene, which in turn has put upward pressure on cold-pressed orange oil prices. Meanwhile, COVID has substantially reduced petroleum prices and petroleum derivatives which can be used as substitutes for d-limonene. Due to COVID-19 some estimate that overall total demand for orange oil in 2020 could be slightly down on the previous year, but the decline in production and the resultant tighter supplies would lead to upward price pressure. Added to this are concerns that the effects of the drought will stretch out to impact even the imminent July 2021 crop.
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