MARKET REPORT OCTOBER 2016

Tea Tree Oil is gaining popularity and the market has been quickly consuming supply. Australia has been recognized for great quality and purity of its Tea Tree Oil. China also produces Tea Tree Oil on a much smaller scale (15%) using Australian Tea Tree seeds. In 2015, Australia has seen a record breaking season producing an increase of 150 MT of Tea Tree. This year, production will be down an estimated 30% (approximately 200 MT). Flooding and excessive rain have caused a late start for the growing process. The heavy rains have damaged crops and will greatly reduce the crop yield for Australian Tea Tree. Because supply will be lower, depending on demand, prices may see an increase later in the year. South Africa is expecting increases in crop yield for 2016, however the amount will be minimal in contrast to Australia's presence in the Tea Tree Oil Market. While minimal, South Africa is known to produce mainly Organic Tea Tree Oil that is obtained from the wild rather than from plantations.

Peppermint crop and availability have been in decline in recent years. India produces over 80% of Peppermint Oil. Inadequate rain experienced partway through the growing process has hindered and delayed crop production this season. Following this period, India has experienced heavy undesirable amounts of rain, further disrupting and damaging the crops. 2015 was a low yield year and in response to this, farmers planted more peppermint to help balance the losses. Low yield and little carry over stock will keep high prices firm in 2016 due to unwavering demand.

Weather extremes beginning with severe drought followed by excessive rain in India has affected the quality of lemongrass shoot growth this year. As a result, production has suffered, driving Lemongrass Oil prices up. 2015 saw a decrease of 30% in production and this year's growing conditions have continued to follow suit. However, with a weaker market at the moment, the supply is approaching the level of demand, causing prices to be more stable. A slight increase in price may be observed, if growing conditions do not improve.

Indonesia is currently the largest supplier of Patchouli Oil supplying approximately 80% to the global market. Currently, supply and demand seem to have reached equilibrium. Indonesia is experiencing an abundance of rainfall. However this did not affect crop. The rain does delay proper sun-drying of harvested leaves though, so the supply of the oil is low at the moment. Possible increase of Indonesian currency is a factor that could potentially affect prices for Patchouli Oil. At the moment Patchouli Oil prices are relatively low as supply and demand is balanced.

The argan tree is endemic to Morrocco and its fruits are wild harvested. GMO varieties of argan have been implemented in other parts of the world in response to the growing international demand for Argan Oil. The Morrocan argan supply for 2016 is good this year compared to last year's poor crop yield. Pricing is variable depending on harvest.

Due to wild harvesting, growing conditions for shea trees remain relatively consistent. This year Ghana has experienced some unfavorable weather conditions and the harvest for 2016 is not as good as was expected. Harvest is lower than 2015. Prices are expected to go up slightly due to an increase in demand for Shea Butter.