Market Report - Indonesia March 2017


Storms and high rainfall have caused floods across various regions and have undermined harvesting and collection efforts for many products. The weather conditions in Indonesia are expected to remain poor until late March.

Indonesia’s weather is generally said to be predictable – ‘hot with the chance of rain’ could be said for 90% of the year. However, in recent months that line is increasingly more likely to be ‘hot with heavy rains’.

Torrential downpours across Indonesia have led to widespread flooding throughout the country. The capital city, Jakarta, has been particularly affected, with the Jakarta Observatory recording more than 144 millimetres (about 5.7 inches) of rainfall in just 24 hours as recently as February 28th; more than the total average rainfall for the month of February.

The heavy rains have caused flooding that has killed at least four people and led to the evacuation of more than 20,000. Schools and offices have been forced to close, and floodwaters have inundated hundreds of homes, causing significant damage to property.

It’s not just rains but there have also been 3 earthquakes in Aceh in just over two months, causing much disruption to supplies:
7th December – 100+ killed in Aceh earthquake (6.5 magnitude)
16th February – Two more earthquakes in Aceh (5.1 and 5.6 magnitude).

This sustained period of adverse weather is impacting most of Indonesia’s essential oil supplies, some more than others. Here’s the latest.


Cajeput Oil

Cajeput Oil Melaleuca cajuputi Harvest: All Year

Supplies have slowed due to the weather conditions but remain reasonable so general availability has not been impacted too much. The quality of raw materials remains good and overall we are experiencing some stability with this product and no foreseeable changes ahead

Market prices USD 24.00 /kilo
Cananga Oil

Cananga Oil Cananga odorata Harvest: June - August

Supplies are generally slow and have been consistently slow for some time now. As a result, prices have remained firm with the market generally accepting these new price levels. At times, quality lacks consistency so some caution needs to be applied when evaluating any seemingly inexpensive offers. At this stage we do not anticipate any major changes over the next few months.

Market prices USD 115.00 /kilo
Citronella Oil

Citronella Oil Cymbopogon winterianus Harvest: October - February

Heavy and persistent rains have severely affected local prices and supplies. Export markets are somewhat secondary compared with domestic demand for this essential oil so locally there is no interest in comparing Indonesia’s performance on the export market with prices from other origins such as China. Instead there is much anguish that local prices are where they are and more to the point the available supplies are as low as they are.  Local prices have increased around 30% since the start of the year and this is unlikely to change until the rain stops and a dryer period has set in for some weeks.

Expect continued price increases until mid-year.

Market prices USD 21.00 /kilo
Clove Oil

Clove Oil Eugenia caryophyllata Harvest: May - September

As reported during Q4 2016 we expected to see prices increase on the back of low supplies and a tightening market and this was before any forecast of such poor weather conditions which have been in play since the start of 2017.

The resulting impact in the market has been poor but it could have been worse and may yet worsen, until dryer times are upon us.

There was always a fear that if supplies hit zero, including supplies of any residual 2016 stocks that have just about managed to keep supplies above zero, then prices could jump sharply. Well this is where we are today with zero stocks at just about every collection point and the prospect of almost zero collections in the coming weeks so the market could be in for a shock.

That said, clove is fast growing and a change in weather fortunes can always reverse these extremes in a matter of a few months, so we shall continue to pray to the weather gods that things start to improve quickly.

If you need stocks soon then act quickly. If you can wait until mid-year then sit tight and let’s pray together and hope for the best!

Market prices - POA
Ginger Oil Fresh

Ginger Oil Fresh Zingiber officinale Harvest: January - May

We reported in December a sudden movement in prices, which came unexpectedly and without good reason and this phenomenon has remained in place throughout the year to date. There was some increased demand during the second half of 2016 but nothing that should have made such a big impact. However, whatever the reason, prices have increased 25% over the past 3 months and these levels are expected to remain in place for the foreseeable future.

Market prices USD 120.00 /kilo
Mace Oil

Mace Oil Myristica fragrans Harvest: March - April, October - November

There is certainly a knock on effect from the current situation impacting the supply and pricing of nutmeg oil but it is less damaging for mace as the market is smaller and can withstand some short-term disruptions in supply.

Market prices USD 90.00 /kilo
Massoia Bark Oil

Massoia Bark Oil Cryptocaria massoia Harvest: September - May

Our general advice continues to be that although supplies have consistency improved since the second half of 2016, some qualities are less than desirable and some caution needs to be observed.

Overall the dynamics of the markets haven’t really changed despite many believing more producers have entered the market but this simply isn’t true. Material is moving around the local market and traded more freely but total volumes are likely to remain unchanged

Market prices USD 400.00 - 700.00 /kilo
Nutmeg Oil

Nutmeg Oil Myristica fragrans Houtt. Harvest: All Year

Supplies are finely balanced at the moment with the market struggling to get on top of itself due to a slow down in collections caused by poor weather conditions. Given the current wet weather conditions it is hard to see any sudden influx of raw materials coming through soon as many farmers have chosen not to return to their plantations until prices return to consistently higher levels. There are also many back orders in the supply chain as many large buyers entered the market late last year. This has decreased the amount of unsold material in the local market and is keeping prices firm.

Don’t expect too many changes over the next couple of months, if anything prices could still tighten a little further.

Market prices USD 72.00 - 79.00 /kilo
Patchouli Oil

Patchouli Oil Pogostemon cablin Harvest: All Year

As always there are many factors to consider when assessing overall supplies, making the process of evaluating and predicting the crops all the more difficult. Some factors under consideration include:

1. Weather conditions
2. Older plantations with lower yields
3. New plantations
4. Farmers less interested at today’s low prices

Certainly older plantations yielding less and some farmers switching to other crops could contribute to a reduction in supplies during 2017 by as much as 40%, whilst new plantations could add up to 20% (at different times of the year). The weather is presently slowing down supplies but this may not affect the overall supplies during the course of the year. Then when you factor in the current and foreseeable market demand the end result can be slightly blurred.

Traditional patchouli buyers will recognise that over the past 12 months it has been a buyers market with enough supplies to keep competition at origin on their toes. However, what perhaps many don’t see is that during more recent times supplies have only just kept up with demand. Any one major change in current conditions could put upward price pressure on prices so our recommendation would be to keep your stocks healthy, as at today’s prices you can’t really get it wrong as prices from here can only go one way.

Market prices USD 42.00 - USD 56.00 /kilo
Vetiver Oil

Vetiver Oil Vetiveria zizanioides Harvest: January - July

The qualities and quantities of supplies remain challenging with no real changes seen over the past 6 months or expected in the coming 6 months.

With little availability we are also seeing some producers over heating the oil during the distillation process to shorten the distillation time but in doing so they are burning the oil. This then affects the colour and the odour, which have not been acceptable for many end-users.

Whilst the education process continues alongside longer-term investments the situation is likely to remain critical for some time.

Market prices USD 500.00 /kilo