Outlook for Grapefruit Oil uncertain.

  A recently published report by Justin Pugsley suggests Grapefruit oil prices are expected to remain firm through 2006, with Florida's damaged trees from last year's hurricanes not being replaced quickly enough and with Cuba reeling from the impact of hurricane Dennis.

With meteorologists forecasting an exceptionally active hurricane season this year, Florida's citrus groves are facing a higher than normal probability of being hit. Florida produces around 70% of the world's grapefruit oil. The US Department of Agriculture (USDA) is forecasting 12.8 million boxes of grapefruit for 2004/5 season from the state, compared with 40.9 million for 2003/5.

The expectation is that the 2005/6 crop will also be very low, with no signs of recovery until at least 2006/7, as many farmers have not bothered replanting grapefruit trees. Where new planting has taken place it takes around three years for trees to start producing fruit.

To make matters worse, local newspaper reports said that there are now new signs of an outbreak of canker in parts of Florida (FOODNEWS passim), which can devastate citrus fruit.

Traders estimate that under normal conditions around 400-500 tonnes of grapefruit oil is produced world-wide, this year it could fall to under 200 tonnes.

The situation  is made worse because the available fruit will largely not be processed into juice. "With supply unable to meet demand, growers can do very well just selling into the fresh fruit market, " a trader said, "and with less of them turned into juice, there will be less peel to make the oil." Around 60% of grapefruit are usually processed into juice, this year most are likely to be destined for the fresh fruit market.

Indeed, the giant agro-trader, Cargill, announced that it is closing a grapefruit juice processing plant in St Lucie Florida, because it has not processed any grapefruit since last year and there probably won't be any fruit to process this year or next.

In Cuba the key Grapefruit producing region of Matanzas has probably lost most of its 250 000 tonne crop with many of the citrus processing factories not opening this year because there's nothing for them to process. With Cuba contributing 8-10% of global grapefruit oil supplies the reaction to the hurricane has resulted in some big European buyers placing orders for grapefruit oil much earlier than normal.

Currently low Nootketone grapefruit oil is being quoted around US$50.00/kg, compared with about US$45.00 before Dennis struck, and forecasts suggest oil could hit US$60-80 later this year.