Drought conditions, combined with frost damage has resulted
in the second year in a row of low orange production in Brazil. Contrary to
most years where forecasts bob up and down, in 2021 every forecast has been
less than the one prior. This is the year when the reality has been worse than
the expectations. Sometimes it is the growers who forecast most accurately and
we have read that growers believe the final production tally will be no greater
than 250 million boxes. This means that Brazil will have experienced two well-below
average crops in a row.
The consequence of low production in Brazil is that there is
considerable demand for orange oil from all other origins. Not surprisingly, the
cost of orange is up and the availability of orange is low.
This is bad news for everyone. The optimistic estimates for
production in Mexico have been tempered by successive hurricanes. It is now likely
that the crop size in Mexico will be average. Of course, production in Florida
is still suffering from Citrus greening with numbers in the 50 million box
The spread between the value of orange oil and orange
terpenes is so large that the cost of folded orange is at an all-time high.
Given that the industrial alternative for d-limonene is petrochemical based,
and far less expensive, there is little reason to expect that the gap between the
value of cold pressed and terpenes will narrow significantly. As a result, the
cost of folded oils may remain high through the spring of 2022.