News

Indonesian Market Update

Sustained hot and dry conditions are continuing to dominate Indonesian weather with little to no signs of rain for many parts. Whilst this seems to be a common story for many producers around the world, this is just one part of a continuing story which is contributing to making some of the world’s most important flavour and fragrance ingredients difficult to source.

The IDR’s continuing appreciation against the US Dollar is another factor. Despite the currency sitting at similar levels to this time last year, over the past 3 months we’ve seen a strengthening of around 5.5%. Given today’s price for Patchouli, that’s an extra $10 /kilo to the export price on just recent currency movements!

The very cost of production is also increasing because of tariffs on the importations of starting chemicals used for many derivatives along with more generic cost increases due to higher than average inflation and interest rates.

This is just part of the picture before you even start to delve into each product category!

Patchouli

This is a classic story of supply and demand patterns, not seen on patchouli for many years. Those in the industry long enough will remember times when it could bounce around $30-$80 /kilo most years and those with experience could buy very strategically. Greener buyers won’t have seen such times and this year’s supply issues will have caught many off-guard. Perhaps even those with a more seasoned eye for thing will also be surprised at where this one has ended up. That said statistics don’t lie, and the warning signs had been in place for those closest to the market. More of which we would like to share with you during the IFEAT Conference in Bangkok so keep an eye out for an invitation to one of our Meet-Ups’ on Whova or feel free to email us for a meeting request.

For now we can say that the most recent crop cycle yielded nothing of notable value to change any of the supply chain dynamics.  Many farmers had to harvest early due to the dry weather which ultimately resulted in smaller yields with the net results still falling short of market demand.  In fact it is reasonable to assume, that it will take two or three positive crop cycles, or a change in the demand patterns to bring around collective change. With this in mind, we may be looking at sustained higher prices until mid-way through 2025, unless something significant, or all factors collectively move in our favour.

Clove

2024 has been a bumper crop, especially in Sulawesi for clove bud and stems, with many trees yielding a second harvest. The focus of collectors and distillers has been to maximise the opportunities presented by a buoyant spice market. Unlike in other years the second crop has prolonged the bud and stem season with little focus given to leaf collections during this time.  Generally there is a lack of appetite from the market to scale up leaf collections so for the moment the distillers lack supplies to make large-scale oil production.

As we look forward, you can assume that in time there will be more leaf oil production and with it some lower prices, however that isn’t for today and isn’t guaranteed.  Note that some of this may be offset by the general conditions listed at the start of this report but none the less we would hope for a downward trend in the future, rather than an upward one.

Citronella

Prices are currently at record levels with no indication of easing. Although Citronella prices have doubled, there hasn’t been a notable increase in its cultivation or distillation, unlike with Patchouli. This is primarily because the market is heavily focused on Patchouli.

Nutmeg

Prices remain stable, but raw material availability for distillation continues to be constrained. The quality of Nutmeg oil is steady, with Myristicin levels around 7-8% and high levels of D3Carene and pinenes.

Cananga

Prices are firm due to a lack of productivity and availability of flowers. It’s important to note that prices have returned to levels that had consistently prevailed for many years before the recent drop, which was caused by a slowdown in the F&F and Aromatherapy industries.

Now, most end users have exhausted their large inventories and are beginning to return to the market.

European Stocks

We are pleased that the strategic partnership between Van Aroma and Jandico is already supporting our clients in Europe. Despite the challenging supply situation we hope we have covered our clients needs and encouraged further product expansion through having local stocks available. Our European portfolio is about to explode, with more key product lines added and to be available from later next month.  More details will follow soon!

IFEAT Conference 2024 – Bangkok

Van Aroma, along with Jandico will be exhibiting, holding one to one meetings and having meet-ups on our stand A2. It would be a pleasure to meet you there. For appointments please email jp@vanaroma.com