Market Report CITRUSANDALLIED.COM CITRUS AND ALLIED ESSENCES MARKET REPORT MARCH 2014

March 2014 Volume Page 1 4Orange oil 4Lemon oil 4Page 2 4Lime oil 4Grapefruit oil 4Tangerine oil Page 3 4Rob’s Crystal Ball Page 4 4Essential oils 4Cananga 4Davana 4Ho Wood 4Lavender/Lavandin Page 5 4LemonGrass 4Mint- Pepermint/spearmint 4Spice Oil & Oil Extracts 4Cassia & Natural Bezaldehyde 4Cardamom 4Clove leaf 4Coriander Page 6 4Cumin 4Ginger 4Mandarin Petitgrain 4Nutmeg Page 7 4Pimento Leaf

Orange Oil The smallest crop since the 1960s in Florida has been caused by the Citrus Greening disease. By some estimates, almost 50% of the citrus crop in Florida has been affected by this disease without a cure. This has not only reduced the amount of fruit but also reduced yields due to the small size of the oranges. Small crops in Florida are most likely to continue until a method for controlling Citrus Greening is both identified and implemented. With a small crop in Florida, the producers in Brazil are being careful not to sell forward until the size of their crop is well understood. We expect the price of orange oil to remain firm. There has also been a meaningful increase in the price of D'Limonene, yet another confirmation of higher prices for orange oil.

Lemon Oil The sharp decrease in expected production for lemon oil from Argentina has moved the price of lemon oil sharply higher. By some estimates, during the next season beginning in June, Argentina will process only 60% of the amount of fruit processed in 2013. Considering how important the production in Argentina is to the world's demand for lemon oil, we may be in for a shortage and record high prices. A freeze in California also has not helped with the aggregate supply of oil.

1

Lime Oil Due to Citrus Greening and low prices for lime juice leading to indifferent maintenance of lime ranches, the availability of lime fruit in Colima was reduce by 50% in 2013. Prices began on the firm side that discouraged buyers from booking forward. This only reduced the interest in processors from buying fruit and hence most of the factories in Colima remained closed throughout the season. By the time a real shortage was evident, the price of distilled oil had almost doubled and the availability of expressed oil was practically non-existent. In Michoacan, at late opening to the season, the limit to the availability of fruit never made up the significant gap in the availability in Colima. Currently, there is a shortage of lime oil of all varieties. Prices are very high and we expect them to plateau until July. By June, the availability of fruit should make production in Colima possible. The price of the fruit will determine the price of the oil.

Grapefruit Oil The demand for Grapefruit Oil is rather small and that fits the supply well. Prices have moved up but not anywhere near the increases experienced with lemon and lime. We do not anticipate any significant movement in either supply or demand during 2014.

Tangerine Oil The supply of tangerine in Mexico is significantly lower than in 2013. This is not good news and may lead to somewhat higher price. The jury is out on this one because the demand appears to be in harmony with supply. Only time will tell.

2

Rob’s Crystal Ball In the past 60 days I have traveled to Central America, Europe, India and Sri-Lanka to listen and learn so as to stay up to date and to pass along our findings to you by way of this report. The Chinese New Year is over and our producers are all back to work. The excitement of the Winter Olympics is also behind us as is the first year of President Obama's second term. Based on the news coverage, you would think the next Presidential election is coming up soon, but it is not. In recent months we have seen the continued focus of the Chinese government to control the amount of pollution and improve the environment. This can and has resulted in plant closing and relocations. In India & Indonesia, the May elections, could have influence on a number of products as currency volatility is quite common during periods of change. As most of you are aware, our portfolio of products numbers in the many hundreds. For that reason, we are exposed to a variety of inputs. And since we are diversified in aroma chemicals, citrus, spice and mint essential oils our views and insights come from conversations in many parts of the globe. In a nutshell, weather wins. Not supply and demand you ask? Our answer is that the demand for most essential oils is almost always in sync with supply because the demand for most products is mature and predictable. For that reason the market has an anticipated demand and producers are prepared for what they are used to. So what is left to move prices are factors that influence yield and cost such as weather, labor and currency exchanges. Heretofore, the demand for most products has been somewhat higher than anticipated because the national demand within the fast-growing economies in India and China has been increasing and hard to predict. For the first time in a long time, it appears the growth of indigenous demand from these countries may have slowed. More than any other factor, this has made it possible for prices to assume a steady course. Certainly, crises such as what we are seeing with lime, lemon and coriander will come and go but if the world experiences an extended period of slower growth, it is possible that dramatic price swings may be the exception rather than the rule. For those of us involved in the global supply chain management, that

3

would certainly be a welcome change. Should the economic malaise continue, we may arrive at a point where growers will hold off on planting and producing unless they have commitments. As you will see in this report, a small handful of citrus oils are under pressure caused by disease and uncharacteristic weather. Therefore, we will continue to do what we do every day and communicate and visit our traditional and new suppliers face-to-face to make the best recommendations we can for our customers. In the land of essential oils, almost every product has a story and always an interesting one.

Essential Oil Star Anise & Natural Anethole This southwestern essential oil grown in the Yunnan province of China has gradually softened over the past year and appears to be at a low level for close to a year. It is reported that the current price is not profitable so the farmers may decide not to collect the fruit and leaves in the mountains during the smaller spring harvest. The peak crop time is October to January. We continue to be in a strong position and welcome your inquiries. Basil The upcoming July crop in Vietnam crop looks good but the weather will be the determining factor. We recommend staying ahead while our stocks last and The price is stable. Bitter Orange The crop in Brazil is over. As previously noted, the lack of demand a few years ago led to many of the trees being eradicated. Accordingly, this had led to continuing short crops. To compound the situation, poor availability and rising costs in the Dominican Republic have added more pressure on prices. We continue to contract and take as means aggressive positions as possible but cannot get the volumes we wish to procure due to the lack of availability in both the northern and southern hemispheres. Given the circumstances, it is important to give us your requirements ahead of time so we can do our best to cover your needs.

4

Buchu The news from South Africa is a robust demand with firm prices. We would recommend staying ahead on this oil and welcome your inquiries period.

Cardamom The Guatemalan crop is almost over and the 2013/2014 crop is well below last year's crop, but average compared to normal seasons. In recent weeks the price of seeds have been increasing rapidly, which should cause firmness in the oil over the next 6-9 months. The Indian crop was estimated to be about? 15MT which also is an average size crop. Since we are significant buyers, we have a good position on this very popular Middle Eastern spice essential oil. Carrot Seed Carrot seed continues to be short due to two consecutive short crops. If you have sizeable needs we recommend staying ahead on this unique oil.

Cassia & Natural Benzaldehyde With the fall (October to December) crop completed the market looks to be stable for the short term. However, with the higher labor costs and low cassia prices it may discourage the collection of leaves and twigs for the spring (May to July) crop, which in turn will push up the prices during the 2nd half of the year. Cinnamon Leaf Having just returned from the growing region in Ceylon the prices are about to reverse from a downward trend. The recent low prices and very dry weather and unpredictable rains will hurt the yields, availability and firm the prices. From a historical stand point, the prices are on the low side and should increase to support the farmer's interest in harvesting this beautiful essential oil.

5

Citronella Java This commodity-like essential oil is showing signs of weak demand which is causing the market to soften. The next crop is April-May.

Clove Leaf & Eugenol We have noticed increased prices due to a weak Indonesian currency and some availability pressure. The next crop is in March-May. Prices are forecasted to remain firm.

Coriander Seed As mentioned in our last report, the price and availability of pure and natural coriander seed oil came under intense pressure as no seeds existed to make oil at source due to the ruined September harvest. In turn, prices have doubled and the pure and natural oil is scarce at best. At present, it is far too early to predict what will happen but the Russian-Ukraine-Crimea conflict could also influence this crop's short term future.

Cumin Seed With the continued political instability in the Middle East we recommend covering your needs and staying ahead. In spite of all the uncertainty the prices have remained calm but that could change overnight. The next crop is in April.

Ginger As the spring season comes to a close with very little processed oil we witnessed prices inching higher by the week over the past few months. The next harvest period is August to September which we hope will calm the market.

6

Ho Wood (Natural Linalool) Due to the extreme heat in the growing region, the production and availability of ho wood oil in China was significantly reduced. Accordingly, prices have meaningfully firmed as the oil is in short supply. We continue to have material on hand but we need to hear from all customers who have large requirements so we can plan to meet your requirements. Lavender We have heard the inventory that existed in Eastern Europe is in better balance and prices have bounced off the lows we have seen over the past 6 months. All in all the lavender market appears to be stable. The next crop will be in August.

Lemongrass In a repeat of our last report, we see lemongrass the same as the previous year. Again, we must also point out that we continue to contract in advance so that the Guatemalan lemongrass is planted and distilled twice each season for our customers. Please send us your inquiries while supplies last. Litsea Cubeba & Natural Citral The distillation has come to an end. Given the low price of the berry and the warm weather the output decreased 10-20% compared to last year. We continue to recommend figuring out your needs and contracting before the price begins to firm. Mandarin Petitgrain (Mandarin Petitgrain Terpeneless) The processing in Egypt is in full swing since January. The crop was average but the carryover from the prior year has kept the prices from increasing as it usually does after the harvest and distillation. In this part of the world it is safe to keep some extra inventory or be sure that we have you covered.

7

Spice Oil Davana In face - to - face meetings with our growers in Bangalore, India, we hear this years crop is significantly (60%) down due to rain damage, lack of labor, land development out of agriculture or to food crops. We recommend you contact us immediately if you have needs over the next 12 months so we can try to cover your requirements. As it looks today, the demand should outweigh the supply.

Eucalyptus & Eucalyptol For well over a year the lackluster demand had kept prices soft. However, with the recent frost in the Yunnan province during December and January, it’s reported to have killed many trees. This along with the lack of interest of farmers to collect raw materials should have influence on moving the market higher as has been recently witnessed in the past few weeks. Garlic Garlic prices are on the rise! For the first time in many years some garlic oil was distilled in 2013. This was done to blend with all the older non FCC oil. The next crop time in June/July will be the time the Chinese will decide to make more oil or not. The decision is primarily based on the price of fresh garlic bulbs. In the meantime, higher prices and finding good quality oil will be a difficult task. We have excellent quality stocks to offer you in the near term. Geranium While the 2013 harvest was below the norm, the demand has fallen as well. Therefore, prices remain stable with good availability. The Egyptian oil has also softened in price and is always an alternative.

8

Mint – Peppermint / Spearmint Having just returned from India,I've learned the Mentha Arvensis crop is anticipated to be 40,000 MT which is significantly down from last year's bumper crop. Mentha Arvensis derivatives, like menthol, seem to be trading in a stable range, with minor volatility, and in the same price range as synthetic menthol. The Spearmint Indian crop looks to be the same as last year as prices soften. Mentha piperita looks to be slightly smaller than last year. The Indian Rupee is down from a high of 68 rupees to 1 USD to a present 62 rupees. American growers are planning for the 2014 planting and end of summer harvest. The Idaho growers are concerned with the water supply. The prices of American peppermint and spearmint are firm. We will update you again when we visit our peppermint fields and growers in the Pacific Northwest. Nutmeg The prices over the past 6 months have softened slightly due to the weaker Rupiah. In recent weeks, the prices have firmed again as the Indonesian Rupiah gained against the US dollar and finding good quality lots of Nutmeg oil continues to be a challenge.

Palma Rosa Prices continue to firm and could easily increase during 2014. Palma Rosa oil is harvested 3-4 times a year.

Petitgrain Cordillera We have seen recent shortages in supply with producers vying for the limited amount of raw materials. We hope by September, at the next harvest, we see better availability.

9

Pimento Leaf The recent season has come to a close and the supply should just meet the demand. We might also speculate that there is very little additional oil in the market place if demand picks up. Due to this situation we strongly encourage you to notify us of your needs long in advance.

Rosemary The market is very firm with very little oil at all sources. We hope with the April crop in Tunisia and Morocco it will help satisfy the ongoing demands. We will be monitoring.

Sage Clary The news on this essential oil seems to get worse by the month. At present, the availability is close to non-existent and we have reports that the availability could decrease in 2014. In the near future, the demand will well exceed supply.

Wintergreen The 2013 crop was limited and prices have sharply increased shortly after harvest. It is reported that there are almost no stocks at source. Therefore, we recommend covering your needs with us now to be sure you are covered. The next crop cycle will be in September, which is the best time to look at fulfilling 2015 requirements.

10