Clove

Clove is obviously a very important material to our industry, as the dynamics of supply & demand affect many ingredients :

* its essential oils (leaf, bud, stem)

* its isolate eugenol & eugenol derivatives (iso-eugenol, methyl iso-eugenol, etc...)

* vanillin ex clove.

Coming out of a disastrous 2010 crop in Indonesia & booming pricing, Vigon is closely monitoring the 2011 market dynamics.

CLOVE LEAF OIL       

Clove leaf prices are sky-high in Madagascar, and will not ease as a new local regulation closes the distillation season somewhat prematurely both in the north area of Fenerive & Mananara, but also in the southern region of Tamatave. Local collectors feed demand from hand to mouth, offering crude oil at firm prices. 

In Indonesia, it is too early to give an accurate long term outlook. On one hand, production numbers of late spring were very healthy (2nd best in 5 years) - most likely due to attractive prices and favorable dry weather that encouraged production. On the other hand, global demand inflamed by emerging markets is extremely high and out of  sync with supply. For now, prices are firm, with distillers raising seeking top dollar. Oil ouput will increase again thru October, and may somewhat correct the demand-supply imbalance. 

CLOVE BUD     

The global production of the starting material will shrink nearly 60%, according to our partner in India. Global output is estimated as follows :  

* Indonesia : Their full crop which is about 80,000 MT is said to be down to 25,000 MT

* Zanzibar : Full crop of 25,000 MT is now down to 10,000 MT

* Madagascar : Good crop of 8 - 10,000 MT is now down to 5 - 6,000 MT   

* Brazil : Around 5,000 MT

* Comoros : Around 2,000 - 2,500 MT

* Srilanka : Around 2,000 MT

* India : Around 1,500 - 2,000 MT

In Madagascar, Clove bud prices fare no better, reaching 20-year highs, with strong demand from the indonesian kretek tobacco industry. This stems from the major shortage expected in Indonesia : our rather pessimistic partner in Indonesia is foreseeing a 88-90% shortage compared to normal output, due to extreme weather last year. This severe shortage of clove bud will bring 2011 crop prices to record levels.    

Lavandin & Lavender     

Southern France (Provence) is by far the largest producer of Lavandin (Grosso, Abrialis, etc..).  For lavender, the French production remains challenged by competition in Bulgaria, and to a lesser extent Russia and China.

Against all odds, we are relieved to see the Provence 2011 crop went well. The crop started 2 weeks late. A drought thru the spring was annoucing a disastrous summer harvest : farmers were bracing for a 500T deficit of Lavandin oil. Thankfully, heavy rains in June saved the day!

Reg. Lavandin, we dodged a bullet! First 2011-crop offers show a slight increase. No wild swings are foreseen.

Reg. Lavender, whereas the French & Bulgarian 2011 crops are normal, we see no sign of softening prices so far.

Vetiver Haiti 

In 2009, as the economy came to a halt.  Fine fragrance demand collapsed, driving demand for vetiver Haiti to simply vanish. Key manufacturers kept distilling vetiver roots, and built a hefty inventory. Prices plummeted.

In 2010, the January earthquake devastated the capital Port-au-Prince and much of its infrastructure. Incredibly enough,  this did not affect vetiver. As the economy was recovering, Haiti re-building & the fine fragrance industry re-stocking  warehouses, haitian shippers exported more oil in 4 months (from January thru April) than thru all of 2009. Demand ate up carryover inventories, and quickly surpassed distillation capacities. Prices nearly doubled.

In  the first semester of 2011, prices remained rather firm. Crop was plentiful, and extraction yields satisfactory.  But energy cost skyrocketed  (petroleum climbed 40%), greatly impacted distillation cost.  Now, halfway thru the second semester of 2011, demand is reported to slow down a bit. Whereas prices always appear on the rise during the 2nd half of the year, soft demand was reported.