Volatile exchange rate in Sri Lanka
Demand in the market for dried coconut products remains good and most producers have sold out up to and including July. Growers are in the comfortable position of selling their product to the highest bidder, according to Chelmer Foods experts. Prices have not changed much in recent weeks, remaining stable in both Indonesia and the Philippines, with only Sri Lanka showing a slight decline. Chelmer Foods stresses that the exchange rate there is extremely volatile and thus offers exporters little security.
Dreading El Niño
A problem that not only exporters but all market players have to contend with is the weather phenomenon El Niño, which has already started in the Asia-Pacific region and usually reaches its peak at Christmas time. As reported by the German newspaper Handelsblatt, among others, residents of emerging Asian countries fear damage from drought, heat and energy shortages that could run into the billions. Other regions, in turn, are affected by heavy rainfall. Handelsblatt states that India's economy could be hit hardest by El Niño, followed shortly by the Philippines as an important coconut producer, as well as Australia and Thailand. However, industrialised countries such as Germany could also be affected by the extreme weather conditions if supply chains are interrupted or bottlenecks occur in the supply of raw materials. Furthermore, the experts write that the water shortage could also cause energy prices to rise further, which would increase global inflation. Thus, the coconut market, like all agricultural markets, faces a challenging season.
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