Dried Fruit

Desiccated coconuts: uncertainty shapes the market

April 21, 2022 12:54 PM, Der AUDITOR
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MANILA. In their latest report, the experts from T.M. Duché take a look at the coconut market, which is marked by the pandemic and geopolitical conflicts. There are small rays of hope, but also major concerns.

Declining commodity prices in Sri Lanka

According to the experts, commodity prices in Sri Lanka have fallen significantly, which can be attributed to the devaluation of the rupee. To what extent this will affect the longer-term price development remains to be seen for the time being. Meanwhile, the country continues to struggle with problems such as repeated power outages and various import restrictions, which have a negative impact on production volumes.

Indonesia seems to have passed the covid peak, resulting in increasing production and good supply. However, the government's long-term plans are to make the economy less dependent on agricultural commodities and to focus on goods that are less volatile.

Landslides in the Philippines

The Philippines experienced exceptionally heavy rainfall, which led to landslides and mudslides, especially in the centre of the country. Locally, this caused considerable damage, which will also affect agriculture and infrastructure; however, T.M. Duché does not expect production in the coconut sector to be affected in the long term.

Prices show a downward trend

Prices on the European spot market have eased in recent weeks, which is probably due to the slight decline in freight costs, among other things. However, it should be noted that these are still more than 60% higher than the prices charged in the same week last year. Fine desiccated coconuts, high fat from Sri Lanka currently cost EUR 2.30/kg FCA Spain.

Desiccated coconuts

Quality, origin

EUR/kg

Fine, high fat, Sri Lanka

2.30

Fine, high fat, Indonesia

2.30

Medium, high fat, Indonesia

2.55

Medium, high fat, Sri Lanka

2.40

FCA Spain

Volatile edible oil market

The market for edible oils and thus also for coconut oil remains extremely volatile. Due to the war in Ukraine initiated by Putin, the oilseed crop there is at least 50% smaller than last year, and depending on how long the situation lasts, there may be even greater losses. According to T. M. Duché, the supply of edible oils such as sunflower seed oil or rapeseed oil could therefore become quite tight. Added to this are the strict Covid measures in China, which severely restrict demand there. The question is whether buyers will want to replenish their stocks as quickly as possible as soon as the restrictions are relaxed again, and to what extent demand can then be met in a hurry.

Rising food costs and inflation in western countries such as Germany are also likely to reduce buying interest in various edible oils here in the long run, and market experts fear that this will happen at a time when palm oil harvests are in full swing.

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