A good flower harvest in Turkey does not compensate for unusually poor production in Bulgaria.

	FLOWERS tons	OIL kilos	CONCRETE kilos
	2001	2002	2001	2002	2001	2002
TURKEY	5000	6200	960	1200	4000	4800
BULGARIA	3500	1900	960	450	1350	950
MOROCCO	200	0			700	0
TOTAL	8700	8100	1920	1650	6050	5750

In our letter last year, our conclusions were that "without Bulgaria's efforts, we would be pessimistic about the situation of this market." Unfortunately, exceptional climatic conditions have prevented the maturation of half of the buds and caused the 2002 Bulgarian harvest to fall by 50% compared to expectations. This is unheard of in the last 30 years. The dramatic fall in supply triggered a buying war and a surge in prices:

the average USD price of a flower has increased by 70% compared to 2002, thus approaching the price of a Turkish flower. Yields have fallen by 7 to 10% also contributing to increased extracts prices. It is still too early to gauge the level at which prices of Bulgarian extracts will stabilise, but sharp rises should be expected as there is nothing left to carry forward from previous years. Last year, Bulgarian production moderated Turkish prices, but it would not be surprising if Bulgaria increased its prices to Turkey's level this year. The exceptional 2002 harvest should encourage Bulgaria to develop new plantations.

With an unchanged cultivated acreage, flower production has increased by more than 20% in comparison to 2001: this reflects a normal harvest, following a 2001 harvest which took place under poor climatic conditions. Every year the set price of a flower is determined at the end of the campaign :
a USD rise of over 20% should be expected. The prices of Turkish extracts will increase less than Bulgarian prices proportionally as they were

already at a higher level, but also because there were reserves carried forward in Turkey from previous years.

The carry-over stocks should provide sufficient supplies of oil. The market should be steadier for concrete, and therefore for absolutes, the tension being accentuated by the absence of Moroccan production in 2002
(see June letter 39).

If rose production in the 2 countries are taken together, the average price of flower has increased this year by 33% in USD, which is the referenece currency, and this rise will be reflected in the price of extracts. But the sharp drop of the USD to the Euro, -15% in one year, will limit this increase for customers who purchase in Euros.


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