Citrus Oils Market Report September 2023

As the summer ends, we are pleased to provide the following market report on the state of citrus oils. 

ORANGE: 

Prices for orange oil cold pressed from all origins are at record highs. Let’s break down what’s going on in each region. 

Brazil 

This season orange production in Brazil was 309 million boxes versus 317 million in 2022. This translates to 12,000 MMT of fruit processed out of a total crop of 16,753 MMT. These two average years follow two small ones of 263 million and 269 million boxes.  Contrast these amounts to the heady year of 398 million in 2018.   

United States 

Production in the US was reduced from 1140 MMT to 975 MMT due to the collapse of production in Florida due to citrus greening disease and Hurricane Ian.  The production of oranges in California exceeds production in Florida, which is on pace to process fewer than 15 million (90 pound) boxes. 

Mexico 

Mexico is having a below average year with the total amount for fruit of 4,200 MMT due to a drought in the producing region.  Of that fruit, 1,760 MMT were processed. That is similar to 2022 and down considerably from 2021 and 2020. 

Belize 

Production in Belize continues to dimmish as the citrus industry shrinks.   

Spain 

Due to the excess rainfall during the fruit set in the spring, total orange volumes were down by 23% in 2023 to 2,900 MMT of oranges.  

Italy 

This year, Italy’s production was down slightly.  

Overall, orange production in the European Union was 831 MMT.   

South Africa 

In South Africa, total fruit was on par with 2022 at 1,630 metric tons. Of that, 155 MMT were processed. This is down slightly from 184 MMT in 2022. 

C&A’s Outlook 

At Citrus and Allied, we’re always trying to predict when the prices for orange oil will fall. At this time, the facts support the notion that pricing relief will not occur until next July at the earliest. 

LEMON: 

Lemon prices have been so low for so long that we are no longer surprised that the cost of lemon oil from certain origins made from specific fruits is at or below the cost of orange. 

Over the past two years, we have not seen any reason for buyers to “go long” since we did not anticipate the emergence of factors that would change the oversupply situation. That may be changing.  It’s possible that a buyer who has covered lemon oil for six months will be rewarded for committing. 

The reason is that the oversupply has had time to be absorbed and the combination overall favorable weather conditions in the producing region is abating. 

LIME: 

Lime Distilled 

High prices and questionable availability of lime fruit in Michoacan have made it very risky for producers to speculate and produce distilled lime oil. With industrial fruit costs over 1000 pesos per ton, the cost of manufacturing distilled lime oil is well over $110.00/kg.  That is because the market for lime juice has remained low due to the low price of lemon juice which can have cross-over uses.  Additionally, the price that pectin companies are willing to pay for dried peel remains low.  With these two markets low, most of the cost of processing a lime must be absorbed by the sale of the oil. 

Given that there is virtually no demand for lime oil at these historically high levels, we conclude that the current situation is not sustainable.  We believe that it makes sense for the price of the industrial fruit to come down significantly. 

C&A is both a processor of lime oil and a significant buyer.  We produce lime oil distilled and lime oil expressed at our plant in Colima. Given the high price for industrial fruit, we’re only producing the amount of lime oil that we know we can sell based on firm contracts.  When we purchase lime oil from other processors, the same thing applies.  If your company needs lime oil distilled, even at these high prices, we should be able to fill your orders.  Given the long lead times, projections are very helpful. 

Lime Expressed 

The price for Lime Expressed types A and B are slightly higher than distilled oil based on the higher cost of production. But there does not appear to be the same level of shortages for either. 

The same holds true for Lime Oil Expressed Persian.  Prices are high but there is material. 

GRAPEFRUIT  

The price for good quality grapefruit oil produced from white fruit has risen due to the lack of available fruit.  This has created a considerable spread between the pricing of both red and pink grapefruit oil versus white grapefruit oil.   

Red and Pink grapefruit oils with slightly low to acceptable nootkatone levels are priced at about half of the price of white oil. 

We believe that additional acreage will favor the pink and red varieties which may increase the unwanted spread in pricing. 

TANGERINE 

There seems to be just enough tangerine oil at prices that are sufficiently high enough so that demand does not spike and low enough to support the existing demand. 

CLEMENTINE: 

This specialty citrus essential oil continues to be processed around the world. The qualities from different sources vary.  We expect that the variations will narrow as time goes by and as processors perfect their methods of extraction.  There is sufficient inventory for flavorists to increase their usage of this oil that can be used to make delicious tasting flavors. 

BERGAMOT AND MANDARIN– It’s too early to provide market reports for either product but this will change in October and November when the yellow mandarins will be processed in Italy and when the bergamot fruits will be on the tree. 

The early indications are that very hot weather will lead to reduced production for both oils in the upcoming 2023-2024 season. 

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