Indonesian Market Update Q1 2020

The driving factor around the market conditions in Indonesian is the impact of the late and now heavy rainy season.

Whilst spanning a vast area with different seasonal timings we can generally expect the rainy season to start from September and last until March. In Sumatra the rains come more earlier in the season and in Sulawesi a little later, starting early November. This rainy season started as late as December in both regions with significantly heavier than usual rains over the two months that followed. After a longer dry season the rains ran off dry land and have caused immense flooding in many parts. As recently as January 29th there have been reports of more deaths caused by the floods taking the season death toll to over 90.

The fact the season started late is likely to mean it will finish late which will impact various crops as detailed below.


New seedlings are generally planted a few weeks after the start of the rainy season and following a minimum 90 day gestation period early harvesting can start. Harvesting then continues every few weeks as the harvester collects the more mature parts of the plant whilst the rest continues to grow.

Based on this theory we start to see a new crop around February and after drying and distilling, new oil comes into the market in April. These supply factors generally impact the price. This year planting only started late December, early January so this process has been delayed around 2 months. As a result we expect to see new oil only by late June.

Today supplies of raw materials are at an extremely low level and with fresh demands for oil, prices have been rising steadily over the past couple of months and are expected to continue to do so.

Clove oils

2019 saw some extremely low pricing on clove and clove derivatives and buyers are quick to get used to this level. Supplies of raw materials had been in abundance and with capacities to fill processors played aggressively to find market share. These price levels were considered unsustainable.  Now the scales are starting to tip the other way. It’s taken longer than with patchouli because of the raw material carry over into the rainy season but supplies are now dwindling. As a result prices are moving up and are likely to continue to move up over the next 2-3 month. Many processors are still suggesting that this is a good time to buy but buyers still dream of those low 2019 prices. Realistically there will be a huge reluctance to return to last year’s low prices by the processors so now just may be a good time to buy.

Indonesia is the biggest producer for Clove Oil accounting for over 70% of global production. It is also AAI’s largest product as it represents between 60-70% of their total output of essential oils.


Low and stable will be music too many ears which is where we find today’s prices.  Considering longer term contract for those larger buyers should be a consideration. There are some small movements in pricing but the variables here are quality and appreciations/depreciations of the IDR versus the USD.

Vetiver oil

Prices plummeted during the past 6 months due to an over supply of oil against market demands (typical for many products!) but it is said that we have now hit the bottom. That would make sense as when you consider the yields and processing costs it must becoming very unattractive for farmers to grow and processors to produce at these kinds of prices. An external driving factor is the Indian market as most Indonesian vetiver is exported to this market but after a good local crop within India, their demands for imports has significantly decreased. If you are a user of this quality, then now is a very good time to buy.

Elsewhere the local production levels of Cinnamon Bark, Kaffir Lime, Gurjun and Fresh Ginger have fallen which has put some pressure on pricing, other products like Cajeput, Massoia and Cananga remain stable.