21 October 2008

Market Report 2007 of Amazon rainforest natural products by Ilko Minev

Rosewood Oil

Production of Rosewood Oil in 2007 improved and was well above the previous year. In all, between the Organic and Regular kinds, about 25 tons of Rosewood Oil were produced. The apparent reason for such increase is that part of the 2006 production was delayed because of the exceptionally low level of the waters in the Amazon basin in the second semester, which affected logistics in much of the producing region. As a result the actual production was delayed to 2007. Again the organic product was responsible for most of the growth due to the increasing environmental concerns. The year was marked by strong valuation of the Real against the Dollar and in December 2007 the FOB Manaus price for organic oil reached US$ 95 per kilo. As the trend continues it is likely that the mark of US$100/kilo FOB will be surpassed in early 2008 (One USD is now worth 1.90 BRL).  The price in Euro was much more stable and therefore customers from Europe preferred quotations in Euro.  

There was one important fact that happened in 2007: the introduction to the market of the first Rosewood Oil made out of leaves and green branches from the new plantations. The initial production was small, only 2 drums, but we hope to be able to offer more in the following years. As the federal and state environmental authorities are exercising stronger and stricter controls over the activity, the producers are increasing the managed planted areas. This is a slow, but promising process that is likely to guarantee the sustainability of Rosewood Oil production in the future. In 2008 Organic Rosewood Oil will most likely continue its growth, while the regular product will continue its decline. With luck the total production might reach 25 tons, but most likely it will be somewhat lower.  In addition to usual production, we expect to be able to offer 3 drums of oil extracted from the leafs and branches alone in 2008.


Copaiba balsam

The year 2007 was not a good year for Copaiba Balsam. The domestic market was somewhat slower then in the previous year, while the export market was really sluggish. Because of the valuation of the Real against the Dollar the FOB Manaus price increased to US11.00/kilo. At this price level it was impossible to find customers. Sellers sacrificed profit margins to close the few deals that were completed. Our expectation is that 2008 will also be a difficult year, as substitutes to Copaiba gain while the exchange rate is unfavorable. All depends on the exchange rate.


Tonka Beans

The crop of Tonka Beans was again relatively small. The price at the end of the year was about 7.50 Euros per kilo. Because of the very scarce availability and low demand in the last years we are no longer giving much emphasis on this business.



Brazil and Amazonas Outlook 2007


The Brazilian economy went through another good (not great) year in 2007, posting almost 5% of GDP growth.  Much of this growth is attributable to increases in the volume of credit in the economy, which reached 30% of GDP during the year, and exports which have soared due to commodity prices (mainly soy, sugar, coffee and metals).  

The Amazonas state economy has been doing outstandingly, with annual growth over 10% for the third year in a row.  It is mainly due to growth in two-wheel vehicles production in the Manaus industrial district and growth in services.  Meanwhile, deforestation rates in Amazonas have lowered to less than 700 sq.km, from over 1500 sq.km before 2003.  


For more information regarding Amazon natural products, please contact Ilko Minev at ilko@bemol.com.br


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