MARKET DEVELOPMENT
July Coconut Oil Exports Down 60 Percent
July Coconut Oil Exports Down 60 Percent
25/08/2014 (Business Mirror) - Philippine exports of coconut oil (CNO) plunged in July due to a combination of tight supply of raw materials and delay of transport vessels, the United Coconut Association of the Philippines (UCAP) said over the weekend.
Another reason is the “higher competitiveness in terms of prices” of other vegetable oils, UCAP Executive Director Yvonne Agustin said in a telephone interview, explaining that the country’s CNO shipments dropped by 60 percent to 49,845 metric tons (MT) in July of this year, compared with 124,480 MT in the same period last year.
UCAP attributed the substantial decline in shipments of the prime commodity during the period to the sustained slowdown in the arrival of raw material, copra, as a result of the natural periodic stress to coconut trees and the destruction wrought by Supertyphoon Yolanda to major coconut-producing areas, particularly in eastern Visayas.
“The decline in July’s shipment should have not been that big. However, there was a delay in the arrival of two transport vessels. We expect this unshipped volume to carry over for the following month,” Agustin said.
She also said the natural stress in coconut trees is a cycle in which the harvest is markedly decreased after a two-year “boom period,” allowing the trees to recuperate.
In terms of prices, CNO maintained a high average of $1,238 per MT in July of this year, higher than its competitor palm kernel oil at $1,109 per MT.
However, Agustin said the wider gap in prices may be attributed to seasonal factors, noting that palm kernel oil production remained high during this period.
“In fact, there’s a notable decline in the prices of CNO in June from $1,385 per MT, compared with $1,231 per MT for palm kernel oil. But because palm oil is at the peak of harvest season, the bigger price differential forces buyers to shift to palm kernel oil,” she said.
“In general, there’s also an expected robust production of other vegetable oil such as soybean, which offers buyers cheaper alternative,” she added.
Early this month, the United Nation’s Food and Agriculture Organization (FAO) Food Price Index registered a decrease for “a fourth consecutive month in July mainly due to a sharp decline in international prices for maize, wheat and certain oilseeds, reflecting ample supplies for these commodities.”
Based on the prices of a basket of internationally traded food commodities, the FAO Food Price Index averaged 203.9 points in July of this year, down by 4.4 points (or 2.1 percent) from a revised value in June and 3.5 points (or 1.7 percent) below the July 2013 level, the UN’s food body reported.
“The lingering decline of food prices since March reflects much better expectations over supplies in the current and forthcoming seasons, especially for cereals and oils, a situation that is expected to facilitate rebuilding of world stocks,” FAO said.
The FAO Vegetable Oil Price Index averaged 181.1 points in July of this year, down 7.7 points, or 4.1 percent from June, the report said, explaining “the decline continued to be primarily driven by falling soy and palm oil prices.”
According to FAO, soy oil values fell mainly in response to record crop prospects for the United States as well as abundant supply in South America while “palm oil quotations eased on persisting strength in Malaysia’s currency and slow global import demand. Prices for rape and sunflower seed oil also weakened, reflecting ample crop prospects for 2014-2015.”
Agustin added that they would meet with major CNO exporters by September of this year to study possible adjustments in their exports target of 850,000 MT for this year, “whether this is still attainable or not.”
Coconut oil—which is used in food, cosmetics and energy-related products—is one the Philippines’s top dollar earners. The country exports over 70 percent of its CNO produce, with 80 percent of the shipments going to Europe and the United States.
Another reason is the “higher competitiveness in terms of prices” of other vegetable oils, UCAP Executive Director Yvonne Agustin said in a telephone interview, explaining that the country’s CNO shipments dropped by 60 percent to 49,845 metric tons (MT) in July of this year, compared with 124,480 MT in the same period last year.
UCAP attributed the substantial decline in shipments of the prime commodity during the period to the sustained slowdown in the arrival of raw material, copra, as a result of the natural periodic stress to coconut trees and the destruction wrought by Supertyphoon Yolanda to major coconut-producing areas, particularly in eastern Visayas.
“The decline in July’s shipment should have not been that big. However, there was a delay in the arrival of two transport vessels. We expect this unshipped volume to carry over for the following month,” Agustin said.
She also said the natural stress in coconut trees is a cycle in which the harvest is markedly decreased after a two-year “boom period,” allowing the trees to recuperate.
In terms of prices, CNO maintained a high average of $1,238 per MT in July of this year, higher than its competitor palm kernel oil at $1,109 per MT.
However, Agustin said the wider gap in prices may be attributed to seasonal factors, noting that palm kernel oil production remained high during this period.
“In fact, there’s a notable decline in the prices of CNO in June from $1,385 per MT, compared with $1,231 per MT for palm kernel oil. But because palm oil is at the peak of harvest season, the bigger price differential forces buyers to shift to palm kernel oil,” she said.
“In general, there’s also an expected robust production of other vegetable oil such as soybean, which offers buyers cheaper alternative,” she added.
Early this month, the United Nation’s Food and Agriculture Organization (FAO) Food Price Index registered a decrease for “a fourth consecutive month in July mainly due to a sharp decline in international prices for maize, wheat and certain oilseeds, reflecting ample supplies for these commodities.”
Based on the prices of a basket of internationally traded food commodities, the FAO Food Price Index averaged 203.9 points in July of this year, down by 4.4 points (or 2.1 percent) from a revised value in June and 3.5 points (or 1.7 percent) below the July 2013 level, the UN’s food body reported.
“The lingering decline of food prices since March reflects much better expectations over supplies in the current and forthcoming seasons, especially for cereals and oils, a situation that is expected to facilitate rebuilding of world stocks,” FAO said.
The FAO Vegetable Oil Price Index averaged 181.1 points in July of this year, down 7.7 points, or 4.1 percent from June, the report said, explaining “the decline continued to be primarily driven by falling soy and palm oil prices.”
According to FAO, soy oil values fell mainly in response to record crop prospects for the United States as well as abundant supply in South America while “palm oil quotations eased on persisting strength in Malaysia’s currency and slow global import demand. Prices for rape and sunflower seed oil also weakened, reflecting ample crop prospects for 2014-2015.”
Agustin added that they would meet with major CNO exporters by September of this year to study possible adjustments in their exports target of 850,000 MT for this year, “whether this is still attainable or not.”
Coconut oil—which is used in food, cosmetics and energy-related products—is one the Philippines’s top dollar earners. The country exports over 70 percent of its CNO produce, with 80 percent of the shipments going to Europe and the United States.