As always we like to share with you our activities and market news and today we’re going to do both. This summer (like most) the Ultra Team found ourselves in beautiful Provence checking in on our next supplies and learning more about the products we buy.
Now the harvest period is over we would like to share our journey with this video and a brief market update on how we see today’s markets. Enjoy either version on Vimeo or YouTube! Can you spot the difference?
The French producers have been investing heavily in their clary sage growing areas over the past few years and with it we have seen a significant increase in production.
If we look back a few year’s we can see a 3-fold jump in oil volumes, from 10 MT in 2015, 18 MT in 2016 and a figure of around 30 MT this year! We now believe there to be around 2,000 hectares of clary sage plantations in the areas surrounding Provence.
It will be interesting to see if the market absorbs these volumes as their quality is different from the Russian and Chinese origins and less favoured in some market segments. That said, the increase in volume has stabilised prices at lower levels, which is sure to attract new users.
A new product for the region with production slowly growing in line with new interests from niche markets. Whilst dwarfed by comparison with other producing countries, the French continue to invest in new plantations, increasing the growing area to 200 hectares in 2017. This should increase to 300 hectares in 2018.
It yields limited oil volumes but has sparked some interest from end-users looking for an alternative source for their coriander needs.
There was a good harvest in July with the South Eastern regions of France producing almost 500 kilo of oil. This is a marked increase on last year’s 200 kilo and 2015’s 80 kilo!
Whilst the French producers would claim their oil is better than the more traditional Croatian type the Croatians would probably say the same for their oil. With the increase in production in both growing areas there is a general expectation that prices will soften but be cautious with this. Demand is growing in the aromatherapy market and given the cost of production, due to small yields, producers will be reluctant to see prices slide and will instead perhaps wait for the markets to catch up with their new demands rather than sell cheaply.
Reflecting on recent years, we can see little future for this variety as year-on-year output declines. 2015 production was down a further 15% on 2014. 2016 was down another 11% and now there is a maximum of 700 hectares of plantations still in existence for this year’s production, which will yield no more than 15 MT.
2017 production was down around 15% on 2016 due to many plants being killed in an extreme drought experienced in the months leading to harvest. This will also have an impact in 2018 as replanting needs to be established in many parts. It is estimated that total production will be around 1,200 MT.
The market has been aware of this issue for a couple of months and given the issues surrounding the global condition of lavender there is no doubt that farmers and co-operatives will try and increase prices on all major contracts by around 5-10% (or €2.00 /kilo).
The decrease in production comes at a time when demands will be naturally higher, which tends to occur when the lavender markets get difficult because lavandin is a good substitute in some applications. With this in mind, expect traded prices to increase over the coming few months.
2017 production was no more than 25 MT, which represents a continued year-on-year decline with 2016 production estimated to be closer to 30 MT. This was a result of damaged crops due to the droughts hitting the area since Spring. Prices for this ‘Super’ type have risen on the back of lower supply, which may in itself cause long-term damage to its usability as end-users are tempted to reformulate to other lavandin or lavender types.
Late frost created some damage to this season’s production of Lavender Population which was in part offset by the increased growing areas. Clonal lavender production will decrease around 10% and Maillette around 15%. Total production of all types is estimated to be 70-80 MT with markets very firm given the global situation.
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