Treatt: No relief ahead on surging lime oil prices

08-Nov-2011 - Last updated on 08-Nov-2011 at 15:04 GMT

Treatt: 'Consolidation within the industry coupled with little inventory in processors’ hands has led to almost historical highs'

Low stocks and high demand are continuing to drive up the price of lime oil, according to one leading flavor and fragrance oils supplier.

In its November market report, Treatt - which supplies raw materials to flavor compounders and food and beverage manufacturers – said: “Worldwide demand has continued to heat up and has not yet settled.

“Processors have been pushing off contracts and supplying in small increments rather than large shipments as the lack and expense of the fruit has kept their stocks very lean. Consolidation within the industry coupled with little inventory in processors’ hands has led to almost historical highs.”

Fresh fruit buyers and food/ingredient processors were ‘fighting to get limes’

There was no carry-over inventory from last year, so buyers came into spring and early summer with low stocks and unusually strong demand, said the firm.

"The crop was delayed many weeks due to adverse rain conditions, which began to push the market up further. By June, industrial fruit prices rose to incredibly high levels, with both the fresh fruit market and processors fighting to get limes.

“It is now towards the end of the season, and with buyers remaining keen to purchase we do not see relief in the price of this oil over the next few months at a minimum, especially when industrial fruit prices remain at very firm levels.”

Bitter orange oil: High prices expected to plague industry for ‘at least the next year’

The news was little better on bitter orange oil, which “continues to be very difficult in terms of both supply and quality”, said Treatt.

“We hope that the influx of demand over the last couple of years will lead to additional plantings, but believe that tight supply and firm prices for this oil will continue to plague the industry for at least the next year.”

Nutmeg: Prices up 15% in last 4-6 weeks

Meanwhile, the early arrival of the rainy season in Sri Lanka had delayed the nutmeg crop, while nutmeg from Indonesia had done little to alleviate the situation owing to quality variations, said Treatt.

“As a result, price levels have moved up by around 15% in the last four to six weeks. Limited availability of raw materials to cater for the continued strong demand from the fresh spice industry is therefore having the expected effect.”

But there was some relief on basil oil, the price of which had risen five-fold from November 2010 to March 2011: “In the last two to three months we have seen a reversal of much of this increase. Availability is good from Vietnam.”