We are generally seeing a return to good supplies, only recently slowed down by the local weather and religious holidays. After a long period of unsustainable supplies of quality material we have been pleased with the recent progress of supplies, which we hope will continue to improve throughout the year.
The situation is similar to that last reported and despite this being a typical harvest period supplies are yet to improve. We hope by October this may have changed and additional supplies start to come online.
Demand continues to be high for this product, as you simply cannot buy any volumes with the market today being based on pure speculation. As such, today’s prices are at an all time high and will rise based on who wants what and when. We hope to see some fresh stocks soon but it’s unlikely to have any immediate impact on price as there is a waiting market for some signi cant volumes.
As with other products the continued rains are negatively impacting harvesting and as such supplies have slowed. This at a time when Indonesian citronella oil has been experiencing fantastic growth across the world as once again Java material becomes a preferred choice for buyers everywhere. The weather coupled with the appreciating local currency has meant that prices have increased around 5% in the past couple of months.
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Supplies have remained fairly stable, meeting market demand, during what has been a very wet rainy season. Clove needs the rain but there is a limit to how much you want when trying to harvest and then dry before distillation. Due to the increased rains, stocks which would usually build during this time to cover the off-season are not in place leaving the market vulnerable to some shortages in the coming months.
When we will see this impact will depend on the market uptake in the next weeks but there is a real fear that once prices start to move the market could jump sharply. Hopefully this isn’t the case but it would be advisable to cover the next few months requirements as soon as possible to avoid these potential price increases.
There is a lot of interest in this product at the moment as the market continues to assess the viability of this quality as a long term option. It has been accepted in a number of new and interesting applications. Prices remain steady but supplies are not as consistent as they could be. Hopefully more controls coming from within the supply chain will improve this over the next few months.
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 markets are smaller and can withstand some short- term disruptions in supply. Of course local prices have risen and coupled with the appreciating currency small but hopefully manageable price increases have been seen.
Overall supplies in 2015 improved and continue to improve modestly in 2016 but this market sector lacks controls and continuity. Supplies are ad hoc and qualities need to be re-worked constantly in particular from some of the newer suppliers offering material from Irian Jaya province. Here the quality lacks maturity and with it the yields are particularly low which is in some ways confusing an expecting market that wants to believe this is a positive change in the market. Efforts are in place to improve the quality and continuity long term but it will take time to find the reassurances we all like to have when dealing with these premium natural ingredients. Today prices remain firm but stable.
The overall situation remains that although supplies are coming through, they are very slow, leaving the spot market firm and the future’s market even firmer.
Collections have been slow for a few months and we are seeing overall supplies dwindle at a time when demand has certainly returned. Today’s situation is a result of the events from the past 18 months, which have seen this product yo-yo in supply and pricing somewhat uncontrollably. Stocks around the world have started to be depleted and as many return to source for new contracts alarm bells have finally started to ring if they hadn’t already.
Given the additional and unexpected rains in the main producing areas during June and July we have seen a period of even fewer collections. Farmers are unable to collect in such conditions and have chosen to leave the fruits on the trees to mature which will later be used for the spice market and not the oil market. Thankfully over the past couple of weeks, the conditions fuelling an almost daily price increase have weakened giving us all a little bit of breathing space to assess the market. It seems we’ve now hit a new price level which could be seen as rm based on the past 12 months or average if you look at the past 24 months! Whilst today the price increases have slowed a closer look at the market would suggest there could be a continued shortage of raw material into the new year with many producers not wishing to commit to any 2017 contracts leaving a few end-users worried about what may happen next. Hopefully a period of calm, but that may be too much to ask for on this one!
There continues to be a two speed market situation within this one product with Sumatra origin material remaining stable whist the Sulawesi origin material could be considered a little weak. That’s not uncommon for this time of year when supplies are generally at their highest and it’s always recommended to buy your next year’s requirements in the later part of the current year.
As a result we have seen raw material supplies lessen in the past week or two as many processors buy up stocks for 2017 contracts putting a little more pressure on today’s spot market. Prices within Sulawesi have increased 10,000 IDR in the past week which confirms a stop on any downward trend. We now expect to see prices start to rise albeit slowly over the coming weeks with the threat continuing to linger that if they don’t, farmers will opt to replant alternative crops for the next season.
We are still waiting on any sign that the supply situation will start to improve but when there’s one positive flame to hold on to another issue comes along to extinguish it. This time it came with the news from Haiti that following the devastating hurricane they recently suffered supplies from that origin could be impacted which will in turn put more demand on the Java type.
Prices today are still above what we’d consider reasonable but unfortunately they are a reality and are likely to remain firm for the foreseeable future. Even with the introduction of fresh supplies it could take some time before we see the markets balanced and prices return to normal levels.
Ultra International B.V.
