U.S. imports of essential oils, however, were at record levels in 1992, with shipments totaling nearly $187 million, 21 percent greater than the previous all-time high of $155 million a year earlier. Orange oil imports more than doubled to $12 million, while lemon oil shipments increased to nearly $28 million from $22 million in 1991, and lime oil imports were up 10 percent to $14 million. Higher market prices for cassia oil pushed import values to $15 million from $12 million a year earlier, as unit import values increased 42 percent to nearly $34 per kilogram.

Essential oils are obtained from natural raw materials by distillation or through a mechanical pressing process. These oils are widely used in perfumery, cosmetic, and pharmaceutical products, and to flavor food and soft drinks. Mint oils are widely used in chewing gum, toothpaste, mouthwashes, and in a wide variety of confectionery and pharmaceutical products. Citrus oils are widely used by the soft drink industry, as well as to flavor confectionery and other food products.

Consumer demand for natural flavorings and fragrances continues to expand, but the market share controlled by artificial flavorings and ingredients is still large because of their wide availability, lower cost, and more stable pricing.

PRODUCTION AND TRADE OF SPECIFIED ESSENTIAL OILS

Mint oils: Large domestic crops, high carry-over stocks, flat demand, and lower prices continue to characterize the mint oil market. In addition, smaller export sales have contributed to weaker prices in 1992, as shipments of peppermint oil fell over 6 percent and spearmint oil exports dropped by 5 percent from a year earlier. Export sales of other mint oils also were down.

U.S. production of peppermint oil in 1992 rose over 12 percent to 3,349 tons, reflecting favorable growing conditions in most producing areas. Yields increased to 74.2 kilograms per hectare, compared with only 64.7 kilograms in 1991. However, the larger crops resulted in 1992 grower prices falling to $12.90 per pound from $13.30 a year earlier and $13.90 in 1990, but the larger volume pushed the total farm value to $94.9 million, compared with $87.4 million in 1991.

Japan and the United Kingdom continued as the principal markets for U.S. peppermint oil exports with a modest growth in sales in 1992. Sales to Canada and the Philippines also were higher, but shipments to France, Germany, the Netherlands, Hong Kong, and South Korea were down from year-earlier levels.

Favorable growing conditions also resulted in a large U.S. spearmint oil crop, as output in Washington State was up sharply from 1991. Idaho, Indiana, and Oregon also had larger harvests, but Wisconsin and Michigan had disappointing outturns. Total U.S. spearmint oil production in 1992 rose 17 percent, with the total value of production increasing to $46.4 million from $43.1 million a year earlier. However, grower prices fell to an average of $12.70 per pound from $13.90 in 1991 and $14.90 in 1990.

U.S. exports of spearmint oil were down in 1992, primarily as a result of smaller sales to the United Kingdom, France, Italy, and Mexico. However, shipments to the Netherlands, Germany, Hong Kong, and Australia were above year-earlier levels.

Menthol: Larger shipments from India, Germany, China, and Japan resulted in a 12 percent rise in U.S. menthol imports in 1992. However, imports from Brazil and Paraguay were off sharply from year-earlier levels. Brazilian and Paraguayan menthol is highly regarded for its quality and sells for a premium price on world markets. Indian menthol is of a different type and cannot be directly substituted in many cases, but has become increasingly popular because of its lower price and improving quality.

Ample global supplies, weak demand, and currency devaluations by India and China have had a bearish influence on market prices. Menthol is a derivative of cornmint oil (Mentha arvensis). The tobacco industry accounts for half of the U.S. menthol market, with the cosmetic and pharmaceutical industries taking most all of the remainder.

U.S. unit import values for Brazilian menthol in 1992 averaged $33.13 per kilogram, down from $41.39 a year earlier. Unit import values of Chinese menthol fell to $14.75 from $17.05, while Indian menthol dropped to $11.49 from an average of $14.10 per kilogram in 1991.

Citrus oils:

The United States is a major producer of citrus oils as well as an important exporter and importer of these commodities. The soft drink industry is the primary user of citrus oils. Other important consumers are the food and confectionery industries. Some oils are also used in after-shave lotions and perfumery products. Citrus oils are now being used as an environmentally safe replacement for petrochemicals in such items as paints and household cleaners, as well as in solvents for the cleaning of computer chips. Even though the United States produces large amounts of citrus oils, imports are significant, as they are usually priced lower and are often blended with domestic oils for the domestic market, as well as for export.

It is estimated that natural citrus oils comprise between 75 and 80 percent of the U.S. market, with artificial oils accounting for the remainder. Orange is the most popular citrus flavor, taking half of the market, followed by lemon with nearly a third of the total. Lemon-lime is estimated to have 10 percent, and lime a 5 percent share. Grapefruit, clementine, and mandarin make up most of the balance. Technological advancements involving distillation procedures, as well as identifying the proper time to harvest the fruit to get the best flavor, have improved quality and extended shelf life of the natural oils.

A large U.S. orange harvest, a sharp rise in orange oil imports from Brazil, and a drop in export sales have had a bearish effect on market prices. U.S. orange oil imports in 1992 totaled 9,989 tons valued at $12.3 million, more than double year-earlier shipments of 3,720 tons valued at $5.7 million. Imports from Brazil amounted to 9,521 tons valued at $9.5 million, up from 1991 imports of 3,181 tons valued at $3.8 million. U.S. orange oil exports in 1992 fell nearly 18 percent to 3,408 tons valued at $10.2 million, reflecting smaller shipments to Canada, Japan, Australia, Germany, and the Netherlands. Unit export values fell to $2.99 per kilogram from $3.20 in 1991, while unit import values dropped from $1.54 to $1.23 per kilogram.

Strong demand by the soft drink industry has kept U.S. lemon oil imports and prices at high levels. U.S. lemon oil imports in 1992 rose 15 percent over a year earlier to 1,722 tons valued at $27.9 million. Unit import values increased to $16.20 per kilogram from $14.95 in 1991 and $13.67 in 1990. Argentina supplies about half of U.S. lemon oil imports, with Italy, Brazil, Spain, and Uruguay accounting for most of the remainder. U.S. lemon oil exports in 1992 totaled 869 tons valued at $10.5 million, compared with 736 tons valued at $11.8 million a year earlier. Shipments to China and Canada were up sharply, but sales to several other principal markets, such as Japan and the United Kingdom, were lower.

Hurricane Andrew devastated Florida's lime oil industry by severely damaging the lime groves and oil processing facilities. The trade embargo has cut off all shipments from Haiti, a situation that has further restricted supplies and thus forced users to rely more heavily on carry-over stocks and imports from Mexico, Peru, and Brazil to meet consumption needs. Also, the use of artificial lime oil has increased as a result of the more restrictive supply situation.

Source:U.S. Essential Oil Trade, Foreign Agricultural Service Circular Series, FTEA 2-93, May 1993.

Article copyright American Botanical Council.

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By Peter Landes