Outlook

Reuters have issued their outlook for 2016. They show that edible oils such as Palm oil will trade on average 5.5% higher this year over last as El Nino hampers crops. However its expected that a combination of low crude oil and only slightly lower crops will keep prices pegged from increasing too much. The continued concern over slower growth in China along with continued glut in crude are all helping the market from running away. However with crude oil one reality persists and that for some producers they are losing money. North Sea Oil production is lose making and a report this week states that up a 25% of rigs are likely to close in next 10 years as production is cut dramatically. It takes time to throttle back crude oil production but make no mistake it is slowly starting to happen. Coconut oil remains firmer as it tracks other edible oils along with its own crops issues caused by ‘El Nino’. However reports suggest it may have plateaued for now.

Desiccated is trading within a narrow band at the moment as shippers compete with one another. You have low husk nut availability which is holding back supply. Also buyers in some regions short of material as they held of buying because of higher prices and have now missed the low prices positions. But with greater supply from Indonesia even in lower quality the upside for now is limited. If coconut oil really has peaked for now then we should be set for stable prices until crude oil changes direction.