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The Nutmeg Conundrum

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Over the past 12 months the essential oils industry has witnessed a general downward trend in pricing. There have been a few notable exceptions, one of which is nutmeg oil. The market for Indonesian nutmeg oil recently surpassed $120/kg for four- to six-drum drum lots, representing a significant jump from the $70/kg prices in the second quarter of 2011.

Growing Regions

Indonesia, Sri Lanka and India are the primary producers of nutmeg oil. Indonesian nutmeg oil, with a typical 8% myristicin content, accounts for approximately 80% of the 500 MT annual global production. Across the Indonesian islands, specific regions have traditionally been designated for the cultivation of nutmegs for the spice and essential oil markets (see map).

The Maluku and Banda islands, commonly referred to as the Spice Islands, primarily cultivate nutmegs for the spice industry, while regions including Java, Sumatra and Aceh mainly cultivate nutmegs for essential oil distillation. Nutmeg originating from Grenada is on the whole destined for the spice market, though the island is still suffering from the destruction caused by Hurricane Ivan in 2004.

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