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Desiccated coconuts: concern about supply shortage

December 11, 2024 at 2:30 PM , Der AUDITOR
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MANILA/JAKARTA. Closures and delistings of various coconut producers are causing concern among traders. The first half of 2025 could be characterised by lower supply and higher prices.

The rumour mill is churning

The coconut market fears a shortage of supply in the coming months and an associated price increase. Firstly, a large Indonesian coconut product manufacturer is said to have been removed from the British retail chain Marks & Spencer's supplier list after the producer failed to make the necessary investments to meet its customer's standards. Market players now fear that this supplier could also have problems meeting the requirements of its partners in the future.

Furthermore, rumours have been circulating in the market that a long-established company in the Philippines, which is responsible for 15% of global desiccated coconut production, will have to cease operations from December 2024 due to financial difficulties, according to the experts at JCP International in their latest report. TM Duché also recently reported something similar, although it is not clear whether this is the same company. The rumours have not yet been confirmed. However, as long as they remain in the air, market players fear a lower supply of desiccated coconuts in the first half of 2025 if larger players stock up as a precaution and drive up prices in the process.

Q1 of 2025 almost fully booked

According to JCP International, it is already almost impossible to get appointments for shipments in Q1 of 2025 from Philippine exporters, but contracts for shipments in Q2 are now being accepted. In general, lower yields and the resulting tighter stocks remain a problem this season, as do unfavourable weather extremes. In addition, there are ongoing delays and higher costs for shipments to the destination countries, as the ships still have to be diverted due to the situation at the Suez Canal.

Good demand and lower stocks in the local markets are causing prices for crude coconut oil to rise in the Philippines, with prices currently standing at PHP 94.00-95.50/kg. Price increases can also be observed on European spot markets such as Rotterdam, where prices are currently quoted at USD 1,860-1,925/mt CIF.

The Drewry World Container Index (WCI) recently fell again by 2% to USD 3,331 per 40'FCL. However, T.M. Duché emphasised that the WCI is still 134% above the average value for 2019 before the pandemic.

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