Lemon oil from all corners of the world is one of Ultra’s core products and is obtained by cold expression or steam distillation of lemon peel.
Lemon has a place in many culinary uses from soft drinks and cocktails to marmalade. However, it can also be used and found in household cleaning products since it can disinfect, deodorise, remove grease and dissolve wax and grime to name but a few uses.
Lemon is also used in aromatherapy to enhance moods and can be used for its anti-bacterial properties in other medicinal applications. In fragrances it gives a fresh uplifting and zesty note to any perfume as it is highly volatile.
Interestingly the three top producers of fresh lemons in the world are not the countries we would associate with oil production; the top 3 being China, India and Mexico, which account for over 40% of the world production.
Today we associate lemon oil production with Italy and Spain (Europe), Argentina and USA (Americas) and even South Africa.
Over the past 40 years Argentina's processed lemon volumes have increased significantly decade on decade, from an average annual volume of 80,000 MT in the 1970s, to 200,000 MT in the 1980s, to 540,000 MT in the 1990s and 900,000 MT since 2000. This is why today its contribution is very important to our markets.
Argentina's 2014 crop disaster put huge pressure on the global market, something we are still recovering from. Argentina contributes around 10% of the global fresh lemon fruit market. When you think that over the past 5 years Argentina has processed an average of 860,000 MT of fresh lemons then any crop 'disaster' will have a major impact on the global market.
For marketing year 2021/2022 fresh lemon production is expected to be 1.9 million metric tonnes (MMT) which is 5% higher than the last crop, that ended at 1.8 MMT, and 15% higher than the previous estimate at 1.65 MMT, due to favourable weather conditions. Lemons for processing are projected at 1.49 MMT which is 8% higher than the last crop which ended at 1.38 MMT.
Fresh lemon exports are forecast at 260,000 MT, up 13% from previous estimates, due to larger production. The fresh lemon export business remains profitable. However, lemon sector competitiveness has been affected by significant production cost increases (especially labour, inputs, energy, inland, and ocean freight costs), a container shortage and high inflation rates. Moreover, although the continuous depreciation of the Argentine peso and the elimination of export taxes make exports more price-competitive in foreign markets, a decrease in export rebates and high interest rates partially offset those advantages.
Over the past decade, the lemon sector has been buoyed by investments in new production and technology, with 70-75% of total production devoted to exports of processed lemon products, such as essential oils, frozen pulp, and dehydrated peel. However, global competition and domestic economic contraction have negatively impacted the lemon sector. Global supply of lemon oil exceeds demand and carryover inventory from the last crop is also adding to the high supply of lemon oil. As mentioned above, production costs are higher because of inflation and export costs have increased due to shortages of containers and high freight cost. All these result in a still weak lemon oil price.
USDA ESTIMATED ARGENTINIAN LEMON PRODUCTION, SUPPLY AND
DISTRIBUTION 2019/20 TO 2021/22 (‘000 MT)
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