As 2023 is underway, the economic conditions of the past year are rearing their head on the essential oils market.
External factors such as a rise in coronavirus cases in China, a lack of demand, and increasing interest rates have led to the softening of prices around the world. In China, local farmers and merchants have been unable to travel into populated cities such as Shanghai or Beijing due to quarantine orders or heath crises in various regions in China.
Though truckload freight volumes remained robust, the skyrocketing diesel prices and inventory imbalances have eclipsed this. Conditions for global shipping
are improving, as costs are being reduced from their record high and a slowed demand has opened capacity in a tight market.
As a family-owned company, C&A has developed and maintained generational relationships with farmers for decades. These important relationships, coupled with our corporate policies, result in our ability to maintain adequate inventory numbers throughout the year.
During the end of November and the beginning of December, the cardamom spice market has fluctuated.
Demand and global consumption reduced, causing an increase in cardamom prices. This is hitting producers hard as they take measures to circumvent this such as protesting, closing travel roads, and requesting aid from their governments.
The cyclical nature of exporters trying to keep prices low, and producers attempting to raise prices makes predicting this quarter of cardamom production more complicated than normal. However, from a historical standpoint, prices will likely fall from today.
Over the past three years, Vietnam has been the top exporter of black pepper. Harvesting began this month. This will help make up for the slowed exports in December. As a result, traders are liquidating last year’s crop at much lower prices.
Brazil is currently the second-largest exporter of black pepper, surpassing Indonesia and India. Brazil has seen an increase in exports in the past year due to crop failure and COVID restrictions in other parts of the world.
While countries like Brazil and Vietnam rush to increase the black pepper supply, many doubt it will meet the global demand that is predicted in 2023. We believe now is a good time to contract for 6 months.
Like many essential oils, the price of caraway oil has risen slightly in the past year due to higher production and processing costs.
The production costs for the farmers, such as fuel, fertilizers, and chemicals, have all risen in price.
Similarly, logistical materials such as packaging materials, freight, and energy have also all drastically risen in price.
In 2022, there were 150 metric tons of fruit oil produced. This mass production will help balance the supply and demand of star anise oil.
Since October, the price of star anise oil, as well as many other natural products, has been going down. It is currently the production season, and farmers are not attracted by the low price. This may lead to a reduction in supply, resulting in a possible price increase next year.
We suggest ordering as soon as possible because the Chinese New Year began January 22nd, 2023.
EUCALYPTUS AND EUCALYPTOL
Currently, the price of eucalyptus oil and eucalyptol are almost at their bottom. We believe taking modest positions now is a good idea.
LITSEA CUBEBA AND CITRAL
Crop yields are projected to be down approximately 25%, and the quality has wavered as well.
The renminbi (RMB) currency rate is below 7 and it has put more pressure on the factories. The currency rate must be taken into consideration. If the RMB gets stronger, the price will be higher. We see uncertainty on the horizon but suggest staying 3 months ahead. C&A is basic in natural citral and is here to help.
The new crop of buchu started this month. From all the information we’ve gathered, we believe the situation with buchu will be manageable in 2023. Buchu is often used in trace amounts in flavors. While your volume may be small, we recommend inquiring as soon as possible to secure volumes.