MARKET DEVELOPMENT
Coconut Oil Premium Over Palm Oil Widens After Typhoon Haiyan
Coconut Oil Premium Over Palm Oil Widens After Typhoon Haiyan
19/02/2014 (Bloomberg) - The price of coconut oil has surged relative to palm oil after a typhoon last year damaged trees in the Philippines, the top coconut oil producer, Oil World said.
Coconut oil prices in Rotterdam were $460 a metric ton more expensive than palm oil as of Feb. 12, a 13 percent bigger premium than a month earlier and more than double the average price difference during the past 10 years, the Hamburg-based researcher said in an e-mailed report. Typhoon Haiyan, known locally as Yolanda, damaged more than 10 percent of Philippine coconut area when it struck in November, Oil World said.
“The severe typhoon damage to the Philippine coconut sector has changed fundamentals,” Oil World said. “At the current premiums, demand for coconut oil suffers a severe blow primarily in the food sector, with consumers shifting to palm oil and seed oils.”
The typhoon damaged 33 million coconut trees in the Philippines’ Eastern Visayas region alone, and new trees take six to eight years after planting to reach full production potential, according to the United Nations Food & Agriculture Organization. The Philippines accounts for 27 percent of global output, the FAO said. The country is the world’s top coconut oil producer, according to the U.S. Department of Agriculture.
World coconut oil imports will total 1.88 million tons in the 2013-14 season that started Oct. 1, down 9.6 percent from the prior year, Oil World said. Global output will be 3.21 million tons, down from 3.44 million the previous season. A Philippine government proposal to increase the use of coconut oil in biodiesel also might curb global import supplies, according to the report.
Coconut oil prices in Rotterdam were $460 a metric ton more expensive than palm oil as of Feb. 12, a 13 percent bigger premium than a month earlier and more than double the average price difference during the past 10 years, the Hamburg-based researcher said in an e-mailed report. Typhoon Haiyan, known locally as Yolanda, damaged more than 10 percent of Philippine coconut area when it struck in November, Oil World said.
“The severe typhoon damage to the Philippine coconut sector has changed fundamentals,” Oil World said. “At the current premiums, demand for coconut oil suffers a severe blow primarily in the food sector, with consumers shifting to palm oil and seed oils.”
The typhoon damaged 33 million coconut trees in the Philippines’ Eastern Visayas region alone, and new trees take six to eight years after planting to reach full production potential, according to the United Nations Food & Agriculture Organization. The Philippines accounts for 27 percent of global output, the FAO said. The country is the world’s top coconut oil producer, according to the U.S. Department of Agriculture.
World coconut oil imports will total 1.88 million tons in the 2013-14 season that started Oct. 1, down 9.6 percent from the prior year, Oil World said. Global output will be 3.21 million tons, down from 3.44 million the previous season. A Philippine government proposal to increase the use of coconut oil in biodiesel also might curb global import supplies, according to the report.