The shortage of supply and rising prices for these two ingredients continues. This situation is likely to persist for the time being.
First hand accounts of the eucalyptus trees in southern Yunnan describe severe damage caused by cold. Pictures show Eucalyptus trees either barren or covered only in dead, dried leaves. The exact extent of the damage and potential for recovery is unknown but we foresee an increase in price at least for the short term. If new Oil hits the market at its traditional time in July prices might begin to soften.
With rising Petroleum prices we would expect to see a change in offers as feedstock costs begin to affect the supply chain.
Offering prices continue to increase on a weekly basis while reports provide no reason to expect a change in the worsening trend for this product.
Recent reports indicate that Oil from the Autumn crop has been consumed and that any spike in demand will cause prices to increase. As we won’t see new Oil until sometime in June, a price rise is expected.
Similarly to Eucalyptus, cold in southern China has caused major damage to the trees. One report indicates that the upcoming Spring crop will be 20% smaller than last year’s. Belief among our sources is inconclusive. Some believe that the traditionally larger Spring crop will ease prices and some say that a shortened Spring crop will not cover demand. Prices for these two ingredients have increased and we expect this trend to continue for several months.
Several reports on Cornmint planting suggest that an increase in acreage will yield 40,000 tons of crude oil. While figures like these are always difficult to verify, we will have a better idea of what to expect once news of the harvest comes out by the end of May. Worldwide inventories are thought to be down at the moment, notably in China, which imported far less than usual from India last year. Suppliers have cited the prevalence of Synthetic Menthol for this drawdown in imports.
News has reached us of a supplier that has been pushing a Cornmint subspecies that they claim has several advantages. They maintain that this variety consumes less water, increases the yield of Oil and Menthol, and can be harvested 70 days after planting rather than the typical 100.
Our sources in India believe that a major producer of Synthetic Menthol is experiencing issues causing delayed deliveries. This has in turn caused demand for Natural Menthol to increase. With inventory among dealers already low, this has led to a rise in prices, but the feeling is that this rise will be short lived.
A first hand account from a dealer visiting the Chinese growing region of Dali cites less acreage devoted to Geranium this year, as farmers have switched to more profitable crops. This aligns with the reports of declining Oil production that we have received for the last several years. Since the bulk of the Chinese crop becomes available in May and June we would not expect any movement in price until then.
Reports out of Egypt maintain that some carryover from the large crops of the past two years still remains. A producer advises that the new crop in June and July will be limited and that prices will gradually increase.
The market report for the week of 3/12 to 3/19 has conflicting information. The Gum Resin market fell slightly as some factories that need cash are settling for low pricing in the short term. This contrasts with reports of rains in Guangxi and Guangdong that have slowed the preparation of the Pine trees for tapping, possibly until May. In light of this limit to production, we would expect prices to begin to firm.
We have a report that supply and demand are currently in balance, keeping prices stable for the time being. Any increase in demand before the new crop is available in August will likely cause prices to increase.
A recent spice market report indicates that Nigeria’s crop was below normal and is mostly sold out. This has increased demand for dried out of China and India. It appears that pricing for Chinese Oil has bottomed.