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 forecast for the new 2018/19 crop, which starts in May is lower, in part because it is an off year, when the trees are more stressed following the large 2017/18 crop. In addition, the trees were partially damaged by last September’s dry weather. The 9th May Fundecitrus forecast covering the groves in São Paulo and South of Minas Gerais, is of 288 million boxes, representing a 28% reduction compared with the season 2017/18. The USDA’s earlier guesstimate for the total Brazilian new crop was 425 million boxes, down by about 75 million boxes or only 15% compared with 2017/18. At this level of output, the amount of orange processed in São Paulo and South of Minas Gerais will fall to an estimated 238 million boxes assuming 50 million boxes for the resh market. It is evident that for the new season, supply will be reduced because of the lower crop leading to fewer oranges being processed for juice and oil. An increase in price is expected for the new crop. Orange oil demand is firm , in part because of the lower inventory. The bumper 2017/18 crop saw a combined production of orange oil and d’limonene of approximately 61,200 MT, of which approximately 30% was d’limonene. Assuming approximately 275 million boxes are processed in 2018/19, the combined orange oil and d’limonene production will fall to 45,000 MT. The trend in orange juice (OJ) consumption will be an important factor affecting orange processing levels and orange oil supply. For a variety of reasons, global OJ consumption has been declining but recently consumption, at least in the USA, appears to have stabilised if not slightly increased. However, some are still forecasting a downward trend in global OJ consumption. Thus considerable uncertainties still remain in the market. Uptake of orange oil in the past few months has been slower than normal, resulting in prices coming under pressure. The combination of a slow limonene market in the USA, and the higher forecast for the 2017/18 Brazilian crop saw oil pric es ease somewhat. However, due to the anticipated lower 2018/19 crop, supply will be limited in the coming months. All eyes will be on new crop pricing in June, bu t an increase in price is expected, as oranges available for processing will be less than the last crop.
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