Food Commodities are having a Rough Start to 2020

Food commodities are having a rough start to 2020 and edible oils such as Palm Oil and Coconut Oil seem to be getting more than their fair share of the volatility.

Palm Oil

Palm oil has seen strong demand in the producing countries of Malaysia and Indonesia, as they phase in increased biofuel blending B20, B30 and B40. Lower crops yields caused by poor weather and reduced investment in planting are also impacting the market.

But with countries in the EU keen to try and reduce Palm Oils use in the food industry along with its demonisation by climate activists demand in some areas is dropping. It is possible though that Palm oil could see a 20%-30% price increase during 2020, driven by that BioFuel demand along with increased demand from China.

Corona Virus

Corona Virus has slowed or even reversed early gains in 2020 as quarantine of China and Asia has impacted consumption. In fact, all edible oils have seen prices dip as the movement of people and products has been stopped. If the Virus does peak by the end of February it could take till late March before prices start to rise rapidly again.

Coconut Oil 

Coconut oil now hovers under the $1,000 barrier driven down by fears of lower demand caused by virus fears. The concern is that once these worries diminish prices could once more rise rapidly.

Desiccated Coconut 

Desiccated prices have stabilized slightly lower after starting the year at an astronomically high level. But the lull in price might be a false hope. With shippers in the Philippines around 5 weeks behind and supplies from Indonesia also late. It is likely only a matter of time that shortages of local material push prices up again. It might be May or even June before supply returns to normal. Buyers are wary of committing at the moment for later in the year as they wait to see where prices will head, but this could leave them up to an even bigger price hike later in the year if edible oils start to rise again and supply does not improve.