Desiccated coconuts: weather and energy costs weigh on the markets

Rising energy prices are taking their toll

Uncertainties surrounding the Strait of Hormuz continue to drive up prices on the energy markets. Palm oil is benefiting from this, whilst coconut oil is lagging behind the general market trend. According to the United Coconut Association of the Philippines (UCAP), the situation is strengthening the competitiveness of palm oil and palm kernel oil. This could stabilise demand for lauric oils, provided the supply chain for coconut products – particularly copra and processing – does not decline too sharply, according to the experts at T.M. Duché in their latest report.

In the Philippines, fluctuations in the energy markets are having a significant impact. Rising costs for liquefied natural gas (LNG) and risks in shipping are increasing pressure on electricity prices, which is why interventions in the electricity market have been carried out at times. Furthermore, fuel prices remain at elevated levels by historical standards, meaning that transport, drying and processing costs are highly sensitive to further movements in the crude oil market.

Desiccated coconuts show remarkable resilience

The Philippine coconut market saw a significant decline this week. The main cause was the sharp fall in copra prices, which also weighed on domestic coconut oil prices. The UCAP reported significant declines in all major production areas. At the same time, data from the Philippine Coconut Authority (PCA) show falling average prices at the processor and grower levels, which underscores the continuing pressure on producers’ incomes, according to T.M. Duché.

The market for desiccated coconuts, by contrast, remained stable. Export prices remained unchanged for the twelfth consecutive week, while local quotations in Manila rose again. This is due to tight short-term availability and stable processing margins against a backdrop of well-secured copra stocks.

As the market experts further point out, coconut oil remains the weakest segment among vegetable oils on the international market. Trading in Rotterdam was quiet, and prices fell again. Domestically, too, prices for crude and refined coconut oil declined. The key factor is considered to be the future trend in copra prices: should the decline continue, domestic oil prices could remain under pressure despite stabilising effects from energy and freight trends.

Rising coconut prices in Vietnam

The coconut market in Vietnam is currently seeing significant price rises for fresh coconuts, driven by tighter supply and brisk export demand, according to Saigon News. Prices for fresh coconuts have risen significantly in Ho Chi Minh City and in key growing regions of Vietnam since April. This is due to lower available volumes resulting from dry weather and stronger demand.

Traders in Ho Chi Minh City reported higher customer demand and rising retail prices at the beginning of May. Red Siam coconuts now cost around VND 14,000 to 17,000 each in retail outlets, depending on size, which is approximately VND 3,000 higher than at the end of April. Shelled coconuts have also risen in price by an average of around VND 2,000 per fruit. In the provinces of Dong Thap and Vinh Long, producer prices for fresh coconuts have doubled to tripled compared to two months ago.

Export demand and drought weigh on supply

Market players attribute this trend to persistent drought, lower yields and strong demand for fresh coconuts and coconut products. According to the Vina T&T Group, further momentum came from rising demand from China, the US and the EU.

Saigon News also quotes the Vietnam Coconut Association, which stated that seasonal factors, extreme heat and supply disruptions linked to tensions in the Middle East had further influenced export prices. However, the majority of the price rise is attributed to measures taken by companies to standardise growing areas, improve product quality and ensure compliance with quality standards.

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