Market Update 28th October 2024

Price Trends and International Markets

International coconut oil prices experienced a slight rebound this week, indicating modest growth. In Rotterdam, offers rose to $1,735–$1,750 per metric ton (MT) for forward positions extending into early 2025, marking a recovery after six weeks of stagnation. Additionally, the price premium for coconut oil over palm kernel oil increased, reaching an average of $187 per MT. This rise is attributed to steady demand despite declining palm oil prices. The growing price premium highlights coconut oil’s sustained market strength, particularly when palm kernel oil is more volatile.

Philippine Exports on the Rise

In June, the Philippines experienced a significant rise in coconut product exports, reaching 219,857 MT, this marks a 67% increase compared to last year. The primary driver of this was coconut oil, which saw exports nearly double compared to previous levels, fuelled mainly by demand from US and European markets. Exports of copra meal and desiccated coconut, however, saw a decline.

Overall, cumulative exports for the first half of 2024 are up by 39%, indicating a positive trend for the region’s coconut industry.

Vietnam Expands Fresh Coconut Exports to China

Since August, Vietnam’s fresh coconut exports to China have grown significantly, with orders totalling 30 to 35 containers per month. This increasing demand could generate around $250 million out of an estimated $1.2 billion in total coconut exports for the year. Vietnamese exporters are enhancing quality, packaging, and pricing to set their products apart from their Thai competitors to stay competitive.

Thailand Faces Production Challenges

Thailand’s coconut yield is projected to decrease by 8.5% due to ongoing drought conditions and pest issues affecting coconut trees. Although prices for mature coconuts are rising because of supply constraints, Thai coconut producers are carefully monitoring these price levels to mitigate any potential impact on consumers. Additionally, the Thai government is working to balance domestic supply by importing coconuts during periods of low production. This temporary solution aims to support both consumers and producers.

Shipping

The Drewry WCI composite index has decreased by 4%, bringing the current rate to $3,095 per twenty-foot equivalent unit (feu). This is 70% lower than the pandemic peak of $10,377 reached in September 2021 but still 118% higher than the average rate of $1,420 from 2019, before the pandemic.

As of year-to-date, the average composite index is $4,036 per feu. This figure is $1,200 higher than the 10-year average of $2,836, influenced by the exceptional freight rates during the COVID-19 period from 2020 to 2022.

Specifically, freight rates from Shanghai to Rotterdam have fallen by 7%, or $241, to $3,132 per feu. Similarly, rates from Shanghai to New York decreased by 6%, or $343, to $5,266 per feu, while rates from Shanghai to Genoa dropped by 4%, or $142, to $3,296 per feu.

In conclusion, while the global coconut market faces pressures from other oil markets, demand for coconut products remains robust. The Philippine export surge, Vietnam’s growth in China, and Thailand’s supply challenges showcase a vibrant yet complex coconut industry. Shipping costs are coming down but still higher than pre-COVID levels.