Lemon Oil Citrus limon (L.) Burm. F. Harvest: May - July

The outlook for Argentine lemons has deteriorated during the early part of 2017, after new assessments of the late frosts in September and October (2016) show some alarming results.  The USDA is projecting decreased output of total lemon fruit to 1.37 MMT, a figure around 10% less than last year and closer to the 2014/15 season.

With both exports of fresh fruit and domestic consumption expected to remain unchanged the difference in supply is likely to come off the available fruit for processing, leading to the number of processed fruit being less than in the past 2 years. Thus 15% less fruit will be available for processing than during the 2015/16 season.

This news has alerted many major buyers of lemon oil and as a result much of the forecast supplies for 2017 have already been committed, leaving some new pressure on the market both in Argentina and in other producing countries like Spain.

More positively it is hoped that on-going improvements to farming practices will help improve yields, this despite no actual expansion in area planted, which remains at 48,000 hectares. The USDA added this to their 2016-year end summary:

“Lemon producers have invested in plant replacement to overcome the effects of frosts, and have only marginally invested in new land. Lemon production competes with sugar cane production and urban expansion in the Province of Tucuman. According to private sources, the Argentine lemon sector is not expected to expand significantly through area expansion but through the incorporation of new genetic material, which would improve yields. “

The net effect of these figures has led to some price pressure with good quality oil now trading on a par with or higher than their European counterparts

Lemon Oil Citrus limon (L.) Burm. F. Harvest: May - July

Last season was reasonably good for this up and coming lemon-producing nation with many now happy to consider Brazilian quality as a straight alternative to Argentinian. Production is continuing to grow along with general demand.

Lemon Oil Citrus limon (L.) Burm. F. Harvest: November - January, April - July

It was supposed to be a reasonable lemon season in Italy but the harsh winter conditions had a severe negative impact. It has been a difficult few years for the Italian lemon industry, reflected in the year-on-year increase in imports to supplement the gaps in Italian production.

Last year’s production was poor so there was hope of some improvements during this campaign but this never happened. While not as bad as for other citrus fruit, the poor winter conditions destroyed an estimated 20% of the lemon fruit, which directly impacted on the volumes available for processors.

As there was no carryover from the previous season the net impact on the overall position is negative with prices firming in the past couple of months.

Lemon Oil Citrus limon (L.) Harvest: August - November

There have been some significant investments in lemon plantations across Mexico in recent years and volumes are increasing.

As of November 2016 there were 10,000 hectares of plantations in Mexico, largely in the state of Tamaulipas with each hectare yielding around 15 MT of fruit.

The season runs from August to November and the 2016 season was considered to be good.

One important factor in longer term investment in Mexican lemon is that unlike most citrus markets around the world, 50% of plantations are owned by processors so there is more control over supplies and less influence from the fresh fruit market.

Investment across Mexico continues with other states also looking to add more trees during 2017.

Lemon Oil Citrus limon (L.) Burm. F. Harvest: July - September

Challenging, to say the least, some would say is the way that the 2016 season unfolded as one climatic event after another made for a difficult time for many growers and processors.

All will be hoping that this season gets off to a better start as last year’s May hailstorms hampered the start of the season which came on the back of the well publicised drought conditions.

Although official data won’t recognise the particular impact for oil processors average production from the traditional growing areas was down around 30% with only around 45,000 MT making it to oil processors (officially this number is doubled but not all processing results in essential oil).

Starting in February along the Limpopo River region, this season is forecast to be similar to last, so whilst down on previous years it should not have the same negative impact as last year with expectations more in tune with reality.

Lemon Oil Citrus limon (L.) Burm. F. Harvest: November - July

The Spanish Primofiori season started in October and the winter season ends March/April when the majority of fruit is produced, especially for processing supplies.

It was largely forecast at the start of the season that after a disappointing 2015/16 season Spanish production would return to previous levels and despite a few bumps along the way, this is generally the case. In fact, the first estimates of 980,000 MT is still the number being used today as the latest best estimate. This is a 22% increase on the previous year but still less than 2014/15.

The season started slowly, as fruits lacked maturity, but started to pick up late November and into December. There was also no rush to start the harvest, as there was an oversupply within Europe of fresh fruit from Argentina. In the end, it was good to be patient as those stocks soon dried up and from the beginning of 2017 demand was back and the Spanish were in full flow.

This has impacted on the amount of fruit processed for juice and oil in the past couple of months, as processors have had to pay fresh fruit premiums in order to secure fruit stocks, leaving some producers already sold out for the season. In fact, the amount of fruit available for processing has been downgraded by around 5% since the start of the campaign.

Oil demand has certainly returned with many seeing Spain as their preferred choice of origin with quality and price at the right levels to do good business. That said, with most of the winter season now behind us and most processors sold out there is a strong tendency that prices will continue to firm, especially given the negative feel about this year’s crop in Argentina. Stocks of Primofiori are close to running out and today fresh fruit prices are at a 15% premium compared to this time last year. This is a direct cost to the processors, which will be reflected in your oil prices.

April should mark the start of the Verna season with as much as twice the volume of fruit expected compared to last year when 40% of the crop was lost due to bad flowering. April is a relatively early start for this campaign but the condition of the fruit suggests the whole season will start and finish early, maybe by the end of June.